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BANGKOK, April 24 (Reuters) – Top Asian rubber-producing countries have threatened to enter futures markets in order to prop up falling prices while easing export cuts in the second quarter, senior industry officials said on Friday.
Thailand, Indonesia and Malaysia exported 5.9 million tonnes of rubber in 2008 and account for 70 percent of global output.
They are also members of the International Rubber Consortium (IRCo), which groups private sector and government officials, and plans to take positions in futures markets in order to influence prices, as well as hedge rubber prices in member countries’ stocks, a senior official said after a meeting in Bangkok.
“We will take positions in the futures markets so that we can manage prices through the markets,” said the official, who declined to be named.
“It could be the Tokyo Commodity Exchange (TOCOM) or the Agricultural Futures Exchange of Thailand (AFET),” he added.
Thailand, Indonesia and Malaysia agreed to cut exports by a combined 48,000 tonnes per month from the second quarter, adding to cuts already taken under an agreement reached in December.
The new figure of 144,000 tonnes is just over half the cut of 270,000 tonnes in exports they had previously announced for the first quarter, but the countries declined to say if they had met that target.
“The current prices are not sustainable and we are concerned that rising supply over the next few months could push prices down again,” Luckchai Kittipol, a Thai member of the IRCo board, told Reuters. “That’s why we have to retain the export cut measures.”
He gave no reason for the smaller second-quarter cut.
The IRCo’s latest proposals have to be ratified by the International Tripartite Corporation (ITRC), which brings together senior government officials from the IRCo countries. They are tentatively set to meet on May 14-15.
POOR DEMAND
Luckchai, who is also president of the Thai Rubber Association, said physical rubber prices remained low and the outlook for demand was poor.
Cash rubber prices fell more than 50 percent from a 56-year high in July 2008 to $1.15 per kg in December, forcing the IRCo to launch the export-cut measure.
They agreed to remove 915,000 tonnes of rubber from the market in 2009 to prop up prices and said they would cut 270,000 tonnes in the first quarter. Those cuts were compared with actual 2007 exports.
Prices rebounded slightly in the first quarter, supported by Chinese buying. Demand rose after the Chinese government brought in stimulus measures.
Benchmark Thai RSS3 was quoted at $1.63 per kg on Friday.
Rubber prices were not expected to rise significantly over the next few weeks as supply was increasing now that farmers had resumed tapping after the dry season ended.
Tokyo rubber futures (TOCOM), which set the global trend, slipped on Friday, approaching a three-week low as a firmer yen and weak crude prices spurred selling.
At 0703 GMT, the newly listed benchmark contract for October delivery was at 154.9 yen ($1.58) per kg, down from the opening 159.2 yen. ($1=98.13 Yen) (Editing by Alan Raybould)
Source: Reuters