India replaced Malaysia as the world's third-largest producer of natural rubber in 2009 after output estimates in Malaysia were cut sharply due to adverse weather, lower yields, replanting, a lack of fresh planting and a notable shift to oil palm cultivation in the last few years.
Malaysia's 2009 production estimates have been revised lower by 14% to a 10-year low of 820,000 metric tons from 951,000 tons, the Association of Natural Rubber Producing Countries said in a recent report.
India also revised its production estimates lower, but only marginally, to 822,000 tons from 827,000 tons, the ANRPC said.
Despite the sharp decline in output, Malaysia continues to hold an important position in the global rubber trade, as it is still a net exporter and also one of the major importers.
The country exported only 13,000 more tons of natural rubber than it imported in 2009, but it also exported an estimated 398,514 tons of compound rubber, up from 272,174 tons in 2008. Natural rubber exports were down 24% in 2009 to an estimated 696,000 tons, due in part to the rise in compound rubber exports.
Production of compound rubber, containing 97%-99.5% natural rubber, has risen sharply to take advantage of China's zero import tariff on the product.
While Malaysia's natural rubber production has been falling, India's natural rubber output has been rangebound between 700,000 tons and 853,000 tons in the last seven years.
If the latest estimates are correct, Malaysia's 2009 natural rubber output will be the lowest since 1999, when production was estimated at 768,900 tons, and would be at 820,000 tons or lower for only the second time in two decades.
Large estates in Malaysia have gradually shifted to more lucrative oil palm planting. The share of small holdings in the country's total natural rubber acreage is now 94.5%, up from 68.3% in 1990.
Area under natural rubber is estimated at 1.25 million hectares, down from 1.84 million hectares in 1990. The tapped area is much lower at just 740,000 hectares, compared with 1.17 million hectares four years ago.
Area under oil palm has more than doubled to around 4.5 million hectares from 2.02 million hectares in 1990.
Malaysia's natural rubber yield improved marginally to 1.45 tons a hectare last year from 1.32 tons in 2005, but that has been able to compensate for the decline in productive area.
During the first half of 2009, growers were reluctant to produce rubber because of slump in prices. Malaysia along with Indonesia and Thailand also implemented an export control program under the International Rubber Consortium to prevent excess supply.
Replanting of old low-yielding rubber trees was initiated. However, part of the replanting is being done with other crops such as oil palm.
In 2009, Malaysia initiated replanting of 30,530 hectares of rubber plantations, but 30% of this area is being shifted out of rubber.
(Source: irco.biz)
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