BANGKOK, Feb 17 (Reuters) – A rubber intervention plan by the Thai government to shore up prices has been delayed by another few weeks by the legislative process and may now start in March, senior industry officials said on Friday.
Tokyo rubber futures, which have gained more than 18 percent since the plan was first announced in early January, shrugged off the news and ended higher. The most active July rubber contract on TOCOM added 4.2 yen a kg higher to settle at 318.1 yen a kg. [RUB/T]
“At this moment, no rubber has been bought under this intervention programme. The government policy has not been practically implemented,” said Pongsak Kerdwongbundit, president of the Thai Rubber Association.
The 15 billion baht ($485 million) budget to buy around 200,000 tonnes of unsmoked rubber sheet from farmers at 120 baht ($3.88) a kg was approved on Jan. 24. It was initially planned to be implemented this month after several legislative steps had been completed.
Under the proposed scheme, the government would offer a soft loan to cooperatives to buy rubber from farmers and keep it in stocks to support prices, aiming to push USS3 grade above 120 baht per kg.
USS3, which farmers in the world’s top producer sell to rubber factories, was at 116 baht per kg on Friday, up from 90 baht at the end of 2011.
“The intervention is expected to start by early March, when we know how many rubber cooperatives will be eligible for the programme,” said Somdet Khemasuk, chairman of the Rubber Growers Cooperatives Federation of Thailand
The benchmark export-grade Thai smoked rubber sheet (RSS3) was offered at $4.10 per kg, supported by a rally in Tokyo futures prices, which set the global trend.
Rubber prices had held up despite the delay to the intervention plan because of a seasonal fall in supply as Thailand enters the dry wintering season, when curbs the flow of latex.
“We do not believe the government will intervene, unless the price drops sharply again. Wintering is around the corner, so that will support raw material prices to a large extent,” said a physical dealer in Singapore.
Thailand exports around 2.8 million tonnes a year, around 36 percent of the global rubber trade, according to the Association of Natural Rubber Producing Countries (ANRPC), which groups countries accounting for 92 percent of world output and exports.
It produces around 3.0-3.2 million tonnes of rubber a year, so the 200,000 tonnes the government plans to buy represents about 6.5 percent of output.

($1=30.8700 Thai baht)

Source: Reuters

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