Thai stock decision prompts rubber market retreat
ERJ staff report (PR)
Bangkok – Rubber futures and physical rubber markets in Asia retreated from their improvement in the previous week, the International Rubber Consortium Ltd (IRCo) noted in an update for the trading week ended 29 Aug.
Investors were concerned about the news on the decision to release of 200 kilotonnes of rubber stocks by the Thai government and weak Shanghai stocks, IRCo said.
However, it added, that an upbeat Wall Street, a weak yen against the dollar, and a rebound of oil prices could help cushion the fall in rubber futures and physical rubber markets in the region.
Asian rubber prices had been settling higher after a weak yen boosted bellwether Japan rubber indicators, IRCo reported 20 Aug.
Benchmark January natural rubber on the Tokyo Commodity Exchange settled 0.7% higher at Yen199.3 ($1.93) a kilogram as the US dollar hit a four-month high against the Japanese currency.
In his report for that week, IRCo chief executive, Yium Tavarolit noted that natural-rubber prices were below those of synthetic rubber in the depressed market.
"If the situation remains unchanged, there is a strong tendency for natural rubber production in the coming year (to) decrease significantly," he commented.
Although there were reports of falling supply due to farmers' reluctance to produce, IRCo did highlight a more upbeat view of the market from listed Thai exporter Sri Trang Agro-Industry PCL.
In its second-quarter results, Sri Trang Agro-Industry reported that there had been "no significant reduction in supply at current low natural-rubber prices" as farmers "still need to make their living on regular tapping of rubber."
Physical rubber prices were mostly higher, although purchasing activity from China was slow as buyers digested stocks in Qingdao.
According to the IRCo report, Sri Trang said a decline in Qingdao warehouse stocks and a new policy to limit natural-rubber stockpiles at the port might point to improved prospects for the market.
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