The Agricultural Futures Exchange of Thailand (AFET) seeks to set up central markets for rubber in each province, while farmers belonging to these markets will be encouraged to produce premium-grade rubber so they can avoid being pressured by middlemen or traders.
AFET President Wiwat Teerawanichpong said that if rubber farmers had better bargaining power, they should not suffer much from falling market prices.
Under the plan, farmers would trade at the central rubber market in each province, where prices would be fairer than in normal trading. Farmers cut lower risks by learning more about global price trends.
Wiwat said that Thai rubber farmers lack information and technology to follow price trends worldwide. he said that if they learn about future prices, they will be able to produce rubber in accordance with market demand.
As of last month, the value of rubber trading in AFET was Bt203 million, compared with last year’s total of Bt265 million, declining because of low demand and prices. In 2011, trading value in AFET was far higher, at Bt644 million.
Currently, Thailand has only about a dozen central markets.
Wiwat said that with the rising number of rubber plantations in many provinces in the North and Northeast, central markets should be set up in each province. These central markets allow farmers to meet directly with buyers, who usually bid about Bt2 per kg above the normal price because central markets ensure quality rubber.
The central markets trade two types of rubber: Grade 3 smoked sheet and raw sheet.
To produce quality rubber, AFET will also encourage farmers not to be too hasty with latex tapping.
The previous week, rubber was traded at about Bt49 a kg, while the price in the futures market was Bt51.8 a kg for January shipment, Bt52.5 for February, Bt53.1 for March, and Bt55.7 a kg for July shipment.
Wiwat explained that with clearer signs of a global economic recovery, rubber prices should bottom out and then increase slightly next year. However, farmers should closely monitor the world demand, particularly in China, a major importer of Thai rubber, since its economy has been expanding more slowly than in past years.
About 57% of Thai rubber went to China last year, with Malaysia following with 11%, Japan 8%, Europe 6%, South Korea 5%, the US 4%, and the rest to other markets.
The Bank of Thailand expects rubber production to increase from 11.26 million tonnes this year to 11.88 million tonnes next year, while demand will rise from 11.71 million tonnes to 12.13 million.
Ake-arun Mongkolsin, marketing manager of LT Rubber, said prices would depend mainly on demand from the auto industry.
He said the rubber price next year should increase, and an acceptable rate for farmers should be over Bt60-65/kg.