Kuala Lumpur – Natural rubber markets could gain, or at least sustain the current positive trend, in the short term, due to factors such as tight supply, high demand and a Covid recovery, according to the Association of Natural Rubber Producing Countries (ANRPC).
In its latest monthly update 14 Dec, ANRPC said the global production of NR is anticipated to be down 10.1% during December compared to the same month last year.
A key contributor, said the association, is the spread of fungal leaf diseases in mature rubber trees occupying around 390,000 ha in Indonesia, 150,000 ha in Thailand, 19,000 ha in Malaysia, and 20,000 ha in Sri Lanka.
This, according to ANRPC, will lower the yield “considerably” for about two years.
In addition, the holdings which are unaffected by the fugal diseases are expected to be given tapping rest from the second half of January coinciding with the annual wintering of trees.
Moreover, the issue of labour shortage is expected to continue to affect supply, as cross-border travel restrictions prevent migrant tappers and plantation workers from returning to Thailand and Malaysia.
While the outlook for the supply of NR is lowered, the ANRPC expects the global consumption rates to increase by 4.0% year on year during December, contributing to higher prices.
The demand will be supported by positive market sentiment and global economic revival on the back of a breakthrough in the development of Covid-19 vaccines.
The ANRPC also noted that crude oil market is anticipated to stay “in favour of NR market” while the US dollar is “unlikely to gain strength” in the short-term.
The association, however, warned that there might be potential weaknesses in the market.
These could include extreme weather in major rubber producing countries and an ease in pent-up demand in major consuming countries such as India and China.
In addition, the development of the Covid-19 vaccines is likely to dim the prospects of NR latex market, the association added.