A local trade association said that local exporters of rubber in Thailand, the second largest exporter of rubber in the world, will cut their production by 100,000 tons starting from October to December this year to abide to the agreement they have made with the Malaysian government.
Thai exporters and government officials are expected to meet next week in Bogor, West Java, to plan about the suitable methods to cut the trees as told by Daud Husni Bastari, the new chairman of the Indonesian Rubber Association last week.
In a telephone interview, Daud said that they will have to discuss on the technical ways on how they can reduce the production in an appropriate way as well as the mechanisms to be followed to supervise the implementation of this plan.
Thailand is just amongst the 3 nations from the South East Asia region, which produces 70% of rubber globally, that agreed to decrease the production and shipments of rubber to 300,000 tons starting on Monday. This is in order to increase the prices of rubber that have greatly decreased in the past few months.
The other 2 countries and Thailand have also planned to cut 100,000 hectares of the old rubber trees to supply the reduction of the production.
According to the Tripartite Rubber Council, the plans of Thailand and the other 2 SEA countries will remove an estimated 450,000 tons of natural rubber production from the market.
Gapkindo’s monitoring and surveillance committee will be the ones to monitor the shipments and supply to ensure that the plan is followed.
Local farmers would reduce their tapping frequency from three to two times a week, while exporters would commit to buy rubber from farmers for stock, Daud said.
“Commitments by Indonesia on the export cut plan will also be supportive for prices,” Sureerat Kunthongjun, an analyst at AGROW Enterprise Ltd., from Bangkok, Thailand, said as quoted by Bloomberg.
Last week, the prices of rubber have boosted for the first after a couple of days on speculation that Mario Draghi, the President of the European Central Bank will announce soon the methods that can relieve the crisis that the region is facing, which lead to the increasing demands for raw materials.
This can be reflected on the data from the Tokyo Commodity Exchange that shows that the February-delivery of rubber boosted to 3.6 percent to close at $2.89 or ¥227.
Indonesia’s rubber exports have dropped to 1.2 million tons in the first half of this year, down 8 percent from the same period last year, on declining demand from Europe, the association recently said.
According to Gapkindo’s forecast, rubber exports would likely plunge 6.25 percent to 2.4 million tons from 2.55 million tons last year. (PRA)