Rubber Prices Plunge on TCE, Benchmark Thailand Rubber decline

Rubber prices plunged 16 percent this month on the Tokyo Commodity Exchange as Europe?s sovereign-debt crisis threatened demand and the worst floods in almost 70 years in Thailand cut automobile output, reducing consumption of tires.

Rubber demand remains strong and there is no significant change in production, Pornsak Jarernprasert, deputy farm minister, said in a statement today. The drop in prices was because of the European debt crisis and a temporary slowdown in car production after flooding disrupted supply chain, he added.

Rubber export prices shouldn?t be lower than 105 baht a kilogram for farmers to make a living, said Pornsak. The benchmark Thai rubber price declined for a ninth day today, falling 2 percent to 99.9 baht ($3.24) a kilogram. Exporters in Thailand, Indonesia and Malaysia that represent 70 percent of global supply agreed to set a minimum price for natural rubber of $3 per kilogram, Thai Rubber Association President Pongsak Kerdvongbundit said.

Thailand, Indonesia and Malaysia will meet next week to discuss measures to stem the slump in rubber prices, and they may delay latex tapping and limit shipments to keep export prices above $3.50 a kilogram, according to Thailand?s Ministry of Agriculture and Cooperatives. They will cut down more aging trees, boost replanting and increase stockpiles, it said.