Thai cooperatives start to buy rubber to prop up prices

BANGKOK: A rubber intervention programme has started in Thailand aimed at supporting prices to help farmers but not much has been bought so far, so the impact on the market has been minimal, according to government officials and rubber cooperatives.

The government approved a 15 billion baht (Us$488mil) budget in January to buy unsmoked sheet (USS3) from farmers at 120 baht per kg to prop up prices. The buying is to be done through cooperatives.

“There are a few cooperatives in the south that have started buying rubber from farmers,” said Wit Pratuckjai, director general of the Office of the Rubber Replanting Aid Fund.

The south is the main rubber area in the top producing country.

Under the plan, the government is offering a soft loan to cooperatives to buy rubber and keep it in stock to shore up prices. The cooperatives will later try to sell it to exporters at a profit. If prices fall, they may sell to the Rubber Estate Organisation, another government arm.

“We’re the first cooperative to start buying and we’ve bought 170 tonnes so far,” said Udomsak Sutthiwetin, head of a rubber cooperative in Nakhon Si Thammarat province.

The government has said it would buy up to 200,000 tonnes to try to push the price of the unsmoked sheet sold by farmers above 120 baht per kg. The price was some way below that at 110 baht yesterday.

Traders said they expected government intervention to remain minimal over the next few weeks as there was not much supply in the market during the dry season, when rubber trees produce less latex.

Supply was expected to be even tighter in April, when farmers normally stop tapping as rubber trees stop producing latex completely.

They normally resume tapping in late April and supply should pick up in May. Traders expect the cooperatives to step up their buying then.