Thailand’s military government is to shelve a plan to sell 200,000 tonnes of rubber from stocks and will focus on measures to increase domestic consumption to shore up prices, government officials said on Wednesday.
Postponing the sale could take some pressure off a market already reeling from oversupply and concerns over economic growth in top consumer China. The supply glut has helped drag down tyre grade prices to their lowest in five years.
“It’s not an appropriate time to sell the stocks now and we are assigned (by the military government) to figure out measures to shore up prices as the first priority,” said a senior Agriculture Ministry official, who asked not to be named.
He said the proposed sale had been put on hold “indefinitely”.
The previous civilian caretaker government had intended to sell rubber stocks it had bought from farmers during an intervention programme to prop up prices that ran from October 2012 to May 2013.
However, no sales were made after farmers threatened to stage protests, saying the plan would put further downward pressure on prices, which have fallen about 25 percent so far this year.
A second government official, who had attended a meeting on ways to prop up prices, said the suspension of the proposed sale would be submitted next week for approval by the ruling National Council for Peace and Order.
Rubber supplies have been rising since mid-April, when farmers in major rubber producing countries resumed tapping after a one-month pause during the dry season when rubber trees stop producing latex.
The benchmark TOCOM rubber for November delivery slipped 0.1 yen to settle at 193.4 yen per kg on Wednesday.
Physical rubber prices have also fallen, with the benchmark Thai RSS3 falling 22% from early this year to US$1.90 per kg on Wednesday.