Thailand is facing yet another surplus that may be worse than the rice surplus seen earlier in the year. Currently, rubber prices have tumbled from their 2011 highs as well as overall demand for the country’s rubber exports. Domestic prices for rubber have increased in Thailand, but global prices have not.
The Rubber Study Group states that Thailand has not done anything to put down on its global production surplus. For the fifth year in a row, the country has had a surplus of rubber.
China, the world’s top buyer of rubber, has slowed demand for the material. Prices of rubber today are 70 % less than they were in 2011. A research group in London states that by keeping up production levels, Thailand is simply masking the bigger issue it will face in the coming years. Much like the major rice surplus that was seen this year, the country is amassing too much rubber that will sit in warehouses.
Thailand’s government has been attempting to help the 1.6 million rubber plantation owners in the country as demand slows. The government has limited exports to try and slow the amount of supply in the market and drive up prices. The government is also urging farmers to get rid of aging trees and turn some of the land to palm oil to reduce rubber output. – Thai Visa News