Businesses Want The Baht Held To 35.50 To The Usd

[Solosiam]

Now chroming is something you watch carefully to measure the health of your manufacturing.

lol, what a little world you must live in....

BTW ever thought that the 15 billion over 10 years is simply the amount they have not paid back yet, for instance they could be borrowing 20 BILLION baht every year and paying back 18.5 billion.

Thats obviously not the loss on the crop, they are losing at most 100 baht-150 baht a ton on your figures - are you suggesting that they are exporting 200 million tons of sugar out of Thailand this year? Thats nearly 30kgs of sugar to EVERY single human on the planet, from just Thailand? BTW that would also mean that Thailand would have to supply just about all the worlds sugar (hint - it doesn't).

There's some really quite funny offerings in this thread and some very skewed thinking.

[xbusman]

Now chroming is something you watch carefully to measure the health of your manufacturing.

lol, what a little world you must live in....

BTW ever thought that the 15 billion over 10 years is simply the amount they have not paid back yet, for instance they could be borrowing 20 BILLION baht every year and paying back 18.5 billion.

Thats obviously not the loss on the crop, they are losing at most 100 baht-150 baht a ton on your figures - are you suggesting that they are exporting 200 million tons of sugar out of Thailand this year? Thats nearly 30kgs of sugar to EVERY single human on the planet, from just Thailand? BTW that would also mean that Thailand would have to supply just about all the worlds sugar (hint - it doesn't).

There's some really quite funny offerings in this thread and some very skewed thinking.

Atta boy Solosiam, you really cleared that up. And what a small world manufacturing is.

Your right about that, they really dont say they need it for this years crop, but still the implications are enormous. If they indeed do have a revolving fund that was 15 billion baht that has been depleted over the past ten years, then they see even larger losses in the near future with no chance the past bills will get cleaned up.

Either way, they want to take 20 billion out of the general fund, thats about four months of the trade surplus, for a single crop.

Solosiam, you keep up us updated on the big wide world will you?

[Solosiam]

The Sugar industry may be a special case....

I'm not sure if it's still true, but Thailand used to have the worlds only benefit sharing program in the sugar industry. If it's still true then obviously the new problems facing the industry may force them here in Thailand to deregulate the sugar industry - Which IMO is all part of becoming a developed nation and moving towards greater competetiveness. Again forcing Thai companies to become globally competetive (or get out), rather than the government bailing them out.

[xbusman]

I would agree. Unfortunately, farmers world wide are the single largest welfare class. Every country subsidizes and protects farmers, its the reason the darn price is so low on the commodities exchange to begin with. Problem is, when the baht is this strong, Thailand might not be able to afford to play in the game.

Now, a little schooling here.

If you want to keep track of the health of your manufacturing you watch three industries in particular.

1. Fasteners

2. Lubricants

3. Chroming

Anyone who manufactures about anything uses the services of number 1 and 2. Its almost never in house, and even if it is, it would be minute amounts with the majority purchased. Chroming is kind of weird because it touches a lot of key industries, particularly transportation but even such diverse fields as electronics and consumer goods.

The guys who handle these items for industry always take the first hit because they are in the WIP, work in process. Raw materials are usually contracted longer term but when you look at ratcheting down you cut back these processes early in the downturn (because they are outside the company and on a job basis).

There are some other areas that are bellweathers, but these are probably the easiest to keep track of because they are pretty visible.

[xbusman]

From the Nation Business section today.

Rubber industry battles for survival

Strong baht, plunging prices, greater competition squeeze manufacturers

Published on August 13, 2007

Thailand's rubber-manufacturers, the world's biggest rubber-exporters, are worried about their survival because the strong baht and tougher competition have brought down trade value and ruined their competitiveness.

Rubber prices in the world market plunged 30-35 per cent to US$2,240 (Bt77,730) per tonne for rubber smoked sheet (RSS3) in July this year, forcing Thai exporters to lower prices to remain competitive. The exporters are also under pressure from importers to cut prices due to the strengthening baht.

The currencies of rival rubber exporters have appreciated much less than the baht. For example, the Malaysian ringgit has only appreciated 10 per cent since early this year, compared to the baht's 18 per cent.

Vorathep Wongsasuthikul, president of Thai Latex Association, said the baht's strength has had a domino effect on both export and domestic prices. The drop in export price had caused the domestic price of natural rubber to slump 30 per cent to just below Bt70 per kilogram in July, compared with Bt105 in the same period last year. The price is currently Bt65 per kilo, down from Bt80 in January.

Vorathep said Thai rubber exporters had to reduce their prices to match exporters from Indonesia, Malaysia and India, whose currencies have not appreciated as much as the baht.

Thai exports account for 34 per cent of the world rubber market. The Commerce Ministry reported rubber exports of US$2.5 billion in the first half of this year, a 3.9-per-cent increase over the same period last year. Thailand's rubber exports for 2006 rose 45.3 per cent to $5.39 billion.

The association said that Thailand accounted for 1.88 million tonnes of the global latex production of 5.75 million tonnes last year, followed by Indonesia with 1.5 million tonnes and Malaysia with 0.74 million tonnes.

Vorathep said the baht's rise had hit the entire rubber industry, from downstream to upstream production (from growers through to manufacturers of latex and finished products).

"The stronger baht has not only hit exporters and manufacturers hard, it has also reduced rubber growers' incomes. When rubber manufacturers cannot quote high prices, they have to seek lower prices from farmers," said Vorathep.

The stronger baht has prompted both manufacturers and exporters to hold on to stocks in the hope of the price going up. However, this is not only creating a cash-flow problem but also the risk of higher losses as there is a declining trend in export prices.

Many small rubber manufacturers are losing financial flexibility as they have lost income due to the baht's rise and cannot bargain for a sale price that covers their production costs, he said.

Of the more than 140 manufacturers in the Thai rubber industry, about 70 small and medium-sized enterprises are facing a financial squeeze.

First sugar, now rubber, I am waiting to see what happens to rice.

The transition is going to be slow and painful, I am very sorry to see this happening.

[onethailand]

I don't think it's going to hurt the rice producers as much, given that the quality of the rice here is of a much higher standard than any other rice. Certainly Hom Mali has little competition in relative terms.

[Carmine6]

I don't think it's going to hurt the rice producers as much, given that the quality of the rice here is of a much higher standard than any other rice. Certainly Hom Mali has little competition in relative terms.

Until I went to the Philippines I never realized how much difference there was in quality of rice. It was as if they'd boiled the rice 3 times to take the flavor and texture out.

There is a test project in Japan to convert low grade rice into ethanol so hopefully that takes rice off the market. I continue to think the Thai government should start up ethanol distilleries to convert rice and sugar. Sugar has something like an 8 to 1 return of ethanol energy to petroleum inputs which is why ethanol is dirt cheap in Brazil. Rice is probably not as efficient, but still probably ok. It would reduce the need for imported oil and increase demand for sugar and rice.