Thailand May Purchase 200,000 Tons of Rubber to Reduce Supply

Thailand -- According to an article in bloomberg.net, "Thailand, the biggest rubber exporter, may purchase as much as 200,000 metric tons of the commodity from growers and keep it in storage to reduce supply after prices more than halved last year. "The aim is to draw 100,000 or 200,000 tons from the market," Somchai Charnnarongkul, director-general of the farm ministry's Department of Agriculture, said in a phone interview today.

"The plan would be proposed to the Cabinet next week." Global recession has pared demand for car tires, undermining efforts by Thailand, Indonesia and Malaysia, the world's biggest producers, last year to bolster rubber prices by trimming output.

The raw material tumbled 56 percent in 2008, the biggest slump in at least 17 years. The farm ministry will seek 4 billion baht ($114.8 million) to fund the price-support plan, Somchai said. The government will provide funds for farmers to store the rubber in warehouses until prices rise to attractive levels, Prime Minister Abhisit Vejjajiva said in an interview on Dec. 17. Thailand may ship 2.6 million tons this year, compared with 2.75 million in 2008, as producers plan to pare production from 3 million tons, according to the Thai Rubber Association.