TRA forecasts mixed outlook for rubber

December 30, 2011

TRA forecasts mixed outlook for rubberTHE Thai Rubber Association (TRA) expects stagnancy in the rubber scenario in 2012 amid the global economic recession, following data from International Monetary Fund that forecasts global GDP growth of 4% in 2012 and 3.2% in 2020 respectively due to the Eurozone debt crisis, economic prospect of the US and China, volatility of stock markets, financial markets and oil price as well as natural calamities across the globe.
These factors are the main cause of the decline in the global GDP. In case of Thailand, NR rubber prices have been severely volatile during the last five years. Since October 2011, NR prices have been continually volatile and inclined to decrease further due to factors including the global economy, bringing about short sale of stock and commodity in futures markets across the globe; volatility in stock markets and oil price. NR prices are also affected by the fall in stocks, gold and oil; and also the behaviour of Chinese buyers – big Chinese buyers deferred shipments.
Although Thailand rubber prices are highly volatile due to the above mentioned factors, the TRA has positive sentiments. Since NR contributes to economic growth, with higher demand and lower-than-expected supply due to seasonal factor, ie high rainfall in the south, resulting in less number of tapping days, NR prices are inclined to rise.
The fact that TSR price is higher than RSS suggests that Indonesia is encountering rubber shortage. Besides, the International Rubber Consortium (IRCo) and Thai government are ready to provide a solution to falling rubber prices. All these factors give a brighter rubber scenario forecast. Data from International Rubber Study Group suggests that NR output in 2020 will increase to 13.77 million tonnes, including 12.46 million tonnes in Asia, accounting for 90.5%, 855,000 tonnes in Africa, accounting for 6.2%, and 449,000 tonnes in Latin America, accounting for 3.2%.
Thailand has remained the largest NR producer, producing 3.82 million tonnes, followed by Indonesia (2.54 million tonnes), Vietnam (1.31 million tonnes), China (1.29 million tonnes) and India (1.26 million tonnes).(PRA)

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