Jan. 26 (Bloomberg) — Global natural rubber supplies are tight and the outlook is bullish on favorable fundamentals, the Association of Natural Rubber Producing Countries said.

“Exporting countries are oriented towards ensuring the best price,” said Djoko Said Damardjati, the association’s secretary general, in a newsletter. That will improve farm income and export earnings, he said. No producer nation “holds any buffer stock,” he said.

Prices doubled in 2009, the best performance since at least 1976, driven by optimism that demand was increasing as the world recovered from recession and as producers curbed supplies. The association includes Cambodia, China, India, Indonesia, Malaysia, Papua New Guinea, Singapore, Sri Lanka, Thailand and Vietnam. Total output represents about 94 percent of global supply.

“The statement is optimistic that prices could move up further,” said Umaporn Thepnuan, marketing official at Future Agri Trade Co. in Bangkok. Futures in Tokyo may climb to 350 yen per kilogram ($3,891 a ton) should they close above 303.8 yen, the highest end-session level since September 2008, she said, using price history as a guide.

Thailand, Indonesia and Malaysia, the three biggest growers, view the current price as appropriate and agreed to take steps to counter any negative trends, according to a joint statement after a meeting last week in Kuala Lumpur.

Tight Supply

The nations put on hold plans to curb exports as the economic recovery boosted prices and demand, the International Rubber Consortium Ltd., which represents growers and exporters, said Oct. 27. Supply was cut after prices fell to 99.8 yen a kilogram ($1,103 a metric ton) in December 2008, the lowest level since August 2002. The price has almost tripled since then to 284.6 yen a kilogram.

The industry is “passing through a situation of tight supply caused by a progressive decline in production and a marked rebound in demand,” Djoko said in the newsletter.

The association said it raised its prediction for output this year in Indonesia, the second-largest producer, to 2.77 million tons from 2.68 million tons. India’s production may total 853,000 tons, up from the previous estimate of 848,000 tons, it said. Vietnam may produce 770,000 tons, up from 680,000 tons, and exports will probably be 750,000 tons, it said, without giving estimates for other countries.

Total supply of natural rubber in association member countries declined 5.1 percent in 2009 to 8.7 million tons. The plantation area expanded to 7.13 million hectares at the end of 2009 from 7.02 million hectares a year earlier, it said.

Source: Bloomberg

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