Thailand will not intervene in the domestic rubber market at this point, as prices had rebounded to a level farmers are satisfied with, the government said on Monday.
As prices recovered, the meeting of government and industry officials from the world's top three rubber producers, Thailand, Indonesia and Malaysia -- initially arranged after a decline caused by Middle East unrest and Japan's earthquake -- was postponed indefinitely.
"Prices fell briefly due to a short-term panic after Japan's earthquake, which raised concern over falling demand, and now prices have recovered so we don't need any measures to push prices up," said Deputy Agriculture Minister Supachai Phosu.
The price of benchmark Thai unsmoked rubber sheet (USS3) almost halved from a record high of 180 baht per kg to 95 baht last week but had rebounded to 160 baht on Monday after the government indicated it would not tolerate unsmoked rubber below 120 baht per kg.
That equates to around $5.0 per kg for the export price of benchmark RSS3, traders said.
The benchmark rubber contract on the Tokyo Commodity Exchange (TOCOM) for August delivery, which sets the global trend, jumped 3 percent to settle at 408.6 yen ($5.07) per kg on Friday, due to supply concerns after the Thai government said it had asked exporters to halt exports to prop up prices.
"Rubber prices have rebounded to levels that we, the major producing countries, are satisfied with, so there's no need for an urgent meeting on that," said Yium Tavarolit, the Thai acting chief executive of the International Rubber Consortium (IRCo).
Japanese financial markets were closed for a public holiday on Monday. Trading will resume on Tuesday and traders said TOCOM could fall again if the market was disappointed at the lack of action by the Thai government.
"Prices could fall again on Tuesday as fears about tight supply due to Thai intervention have eased," said a trader in Thailand's Hat Yai rubber centre.
TIGHT SUPPLY TO SUPPORT PRICES
Although the absence of aggressive intervention from the government of Thailand, the world's top producer and exporter, could drag futures down on Tuesday, traders said prices would continue to be supported by seasonal tight supply.
"Supply will remain tight anyway, despite no intervention, because farmers have stopped tapping," said a Malaysian trader.
Farmers in Thailand and Malaysia have halted tapping because rubber trees stop producing latex during the dry season. That means supply will be cut sharply until tapping resumes, normally by late-April, traders said.
"Futures prices may face a short-term corrective phase, but physical prices should not drop as supply is falling at a time that demand remains strong," one trader said. ($1=30.29 Baht) ($1=80.59 Yen)
(Source: http://www.irco.biz/BlogMoreDetial.php?id=2742&ShowContent=news)
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