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March 31 (Bloomberg) — Thailand, the world’s largest rubber exporter, is “very satisfied” with prices that have surged to a record in local-currency terms on strong overseas demand and limited supply, a deputy minister said.
“Prices have risen on their fundamentals,” Supachai Phosu at the ministry of agriculture and cooperatives said in a phone interview today, without giving a forecast. “The government doesn’t need to build up inventory and will leave it to exporters to manage their stockpiles,” Supachai said.
Rubber priced in baht reached an all-time high this week, while the yen-denominated contract in Tokyo has surged to the highest level since 2008, buoyed by increased demand as the global economy moves out of recession. Drier-than-usual weather in southern Thailand, which has coincided with the annual low- output season, has also spurred the rally.
The government’s view will “continue to support domestic prices to rise further,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said from Bangkok.
Rubber on the Tokyo Commodity Exchange has risen 12 percent this year, touching 314 yen a kilogram yesterday, the highest price since September 2008. The September-delivery contract settled today at 308.3 yen ($3,310 a metric ton).
State Fund
“The government is very satisfied with rubber prices,” Supachai said from Bangkok. An 8 billion baht ($247 million) state fund that may be used to shore up local prices by buying latex from farmers “will be used when prices fall,” he said.
The May-delivery contract on Thailand’s Agricultural Futures Exchange rose to 114 baht a kilogram, the highest price since the bourse was set up in 2004, according to a statement yesterday. The auctioned price of ribbed smoked sheet 3 was a record 112 baht a kilogram today, according to Bloomberg data from the Rubber Research Institute of Thailand
The agriculture ministry has asked the state-owned Rubber Estate Organization, which promotes output and exports, to stop building up inventories, said Supachai. The body holds about 500 tons, he said. That’s less than 1 percent of forecast output.
Production this year may total 3.1 million tons, with exports of about 2.85 million tons, said Supachai. The figures are right in line with Jan. 13 forecasts from the nation’s Office of Agricultural Economics.
Source: Bloomberg