Thai 2012 rubber output seen up 5%

BANGKOK (Reuters): Thailand, the world’s biggest rubber producer and exporter, expected production of around 3.15 million tonnes in 2012, about five per cent more than the 3.0 million forecast for 2011, the head of the country’s rubber exporters’ association said on Monday.

“It’s rained a lot this year and we may face a lot of rain again, so we expect a minimal rise of around five per cent in production,” Pongsak Kerdwongbundit, president of the Thai Rubber Association, told Reuters.
He said the rise in 2012 output was due largely to trees that were starting to produce rubber in the northeastern region.
The government expanded rubber areas by 160,000 hectares (395,200 acres) in the northeast in 2004. Rubber trees take around seven years to mature and start producing latex. Pongsak forecast rubber exports would increase to 2.8 million tonnes in 2012 from around 2.7 million tonnes this year. “We expect to see a certain rise in domestic consumption next year, so exports won’t grow much,” he said, adding that the expansion of major tyre makers in the country would absorb any increase in production.
The tyre industry consumes around 70 per cent of rubber production globally. Pongsak said demand for natural rubber was expected to remain strong next year although there could be a slight drop in Europe, where the economy was likely to struggle because of the euro zone debt crisis. “But auto industries elsewhere, including China and India, should remain strong,” he said.
Pongsak declined to give any forecast on prices in 2012.
However, traders and industry official said they believed the price of Thailand’s benchmark smoked rubber sheet (RSS3) should not fall below $3.0 per kg because of intervention by the Thai government if it approached that level and the refusal of exporting countries to sell rubber below that level.
The Thai Government said in November, it was ready to step in and buy unsmoked rubber sheet (USS3) from farmers at 95 baht ($3.03) per kg to support farmers if necessary.
Pongsak told Reuters in November exporters’ associations in the top three producers, Thailand, Indonesia and Malaysia, would not sell rubber at prices below $3.0 a kg.
RSS3 had dropped by more than half to about $3.00 per kg in early November from a record high of $6.40 per kg in February, in large part due to the deteriorating demand outlook because of the crisis in Europe.
However, seasonal monsoons in the south of Thailand, the country’s main rubber area, have since cut supply and helped support prices. The price of RSS3 was at $3.35 per kg on Monday.