Thailand, the world’s biggest rubber producer, plans to cut production by 700,000 tonnes in the six-months starting from October to shore up prices, the Agriculture Ministry said yesterday.
“We will encourage farmers to tap less latex as we aim to cut rubber supply by 50% between October to March,” said deputy Agriculture minister Theerachai Saenkaew, who oversees rubber matters.
He told Reuters that the cut in output was based on the 1.4 million tonnes Thailand produced from October 2007 to March 2008.
It would be equivalent to around 23% of Thailand’s likely production this year of around 3.1 million tonnes.
The country produced 3 million tonnes in 2007. Theerachai said the government would accelerate its replanting programme by urging farmers to cut down more ageing rubber trees.
It aims to cut the area covered by rubber trees that are more than 25 years old by 64,000 hectares (158,100 acres) a year, up from the current 32,000 hectares per year.
The price of Thai RSS3, a benchmark for physical prices, was quoted at US$1.85 per kilogram on Monday, just a few months after it struck a 56year high of US$3.25 in July.
Tokyo rubber futures reflect the bearish outlook, falling more than 5% on Monday, with weaker oil prices and a stronger yen adding to the pressure on prices.
Car sales are slumping as consumers turn cautious in the face of a global financial crisis, and with more than 70% of rubber sales going to the car tyre industry, top producers Thailand, Indonesia and Malaysia are feeling the pinch.
As part of the plan to reduce rubber supply, Thailand will also reduce physical rubber trading days in local trading centres across the country from October to March, when supply was expected to fall, Theerachai said.
“Trading days would be cut by two or three days per week to meet falling supply,” he said.