Traders welcome 'Rubber Fund' as good step to push up prices

[Lite Beer]

Traders welcome 'Rubber Fund' as good step to push up prices
Petchanet Pratruangkrai
The Nation

BANGKOK: -- Rubber traders yesterday welcomed the planned Bt420-million "Rubber Fund" as a good start to ensure a brighter outlook for their industry, hoping that it could help shore up prices of the commodity.

Meanwhile, Finance Minister Sommai Phasee conceded that the government's financial aid to rubber farmers was slower than expected because of a multiple-stage process in a bid to prevent corruption.

Currently, the price of rubber ranges between Bt36 and Bt37 a kilogram, the lowest in a few years, compared with the peak of Bt174.44 per kilo in 2011.

'A good start'

"The fund is a good start to encourage more trade in the futures market, which will help shore up the rubber price in the long run," said Luckchai Kitipol, honorary president of the Thai Rubber Association and chief executive of Thai Hua Rubber.

The Agricultural Futures Exchange of Thailand (Afet) will be widened and joined by more foreign traders. This should help promote more rubber trading, he said.

He expects trading on the futures market should exceed 1,000 lots a day from only a few hundred lots currently after the government supported the purchase of rubber on Afet.

Other measures including the encouragement of cooperatives to purchase rubber from the market should also increase prices soon.

Price likely to rise

Moreover, with expectations of lower rubber production in the North and Northeast, as well as in China, the price should increase in February.

However, Luckchai said he could not predict how high the price would climb next year as it depended on the world market.

With lower oil prices, Luckchai said the world economy should show a stronger recovery and that would increase consumer demand and drive up agricultural prices.

Aat Pisanwanich, director of the International Trade Studies Centre, said the government and private enterprise had the right moves to support market prices of rubber.

However, the Rubber Fund is too small to drive up rubber prices significantly.

"At least Bt10 billion would be needed to drive up the rubber price in the market. Moreover, the government needs to inject some money to encourage local enterprises and cooperatives to set up processing plants to absorb the supply of raw rubber," he said.

He said that with serious action by the government in cooperation with private enterprise, the price of rubber should increase over the next two months.

However, it would be quite difficult to drive up the price to Bt80 per kilogram.

The price of rubber should be above Bt50-Bt60 per kilo in the first quarter of next year, he added.

According to a study by the centre, the cost of rubber production is Bt64 a kilo.

As chairman of Bank for Agriculture and Agricultural Cooperatives (BAAC) during his visit to the financial aid project for rubber farmers in Krabi, Sommai said about 4,000 farming households with a combined plantation area of 3.99 billion rai had been paid Bt39 million in compensation for low rubber prices.

The government had set a budget target of Bt8.2 billion to pay 850,000 households.

The payment was set at Bt1,000 per rai for not more than 15 rai and commenced on November 15.

He said the BAAC had streamlined the process so as to be able to pay the rubber farmers faster.

Source: http://www.nationmultimedia.com/national/Traders-welcome-Rubber-Fund-as-good-step-to-push-u-30249760.html

-- The Nation 2014-12-13

[selftaopath]

Seriously?

[chainarong]

This is a good sign that the lunatics are running the asylum , I will give a little example as plain as I can , Thailand has increased its price say 20% now it is 20% higher than any other supplier , now Malaysia with excellent marketing has lowered its cost by 2% however against Thailand's price it is 22%, now I want to buy 100T of rubber l,where am I going to go, Malaysia sell it's rubber Thailand is left in the warehouse, err crikey like the Rice scam scheme. Verdict: place is run by slow learners.

[ramrod711]

"The fund is a good start to encourage more trade in the futures market, which will help shore up the rubber price in the long run," said Luckchai Kitipol, honorary president of the Thai Rubber Association and chief executive of Thai Hua Rubber.

Jeez, I hope rubber doesn't rot.

[worgeordie]

The only real thing thats going to increase the prices

of rubber,in the long term is increased demand,or less

production,its a simple as that.

regards Worgeordie

[klauskunkel]

Rubber...it's elastic

[englishoak]

Dont worry, It'll bounce back

[DLock]

The only real thing thats going to increase the prices

of rubber,in the long term is increased demand,or less

production,its a simple as that.

regards Worgeordie

...and that, Ladies and Gentlemen, is the bottom line.

This dismal attempt by the Government will pay a few households and keep them happy for a few months.

...but if they think this bandaid approach is somehow going to stimulate demand, reduce oversupply and reduce overproduction, they are kidding themselves.

Farmers 2. Government 0.

[timewilltell]

Well prices in the commodity markets are also subject to quite a bit of influence on whether funds are buying or liquidating the asset class. This can have a huge effect on prices. However unless Thailand wants to devote its entire GDP to trying to manipulate the market, bearing in mind it it is a cyclical thing so eventually those that bought have to sell unless they consume, it becomes rather futile for any government to attempt this.

It is fairly simple to understand and you would think they learned the lunacy of such policies from the rice scam. But of course the people in charge are more likely just trying to keep the punters happy knowing full well it cannot work, just as Thaksin did. I really don't believe these people are so stupid or ill informed. The producers may well be but not the politicians. Isn't Suthep into rubber? (no jokes please)

[maidee]

international prices are not setup by the wish of some thai military pseudo politicians

[vijer]

Seriously?

Sure, if TiT can have a rice scam err scheme then why not a rubber scam err scheme.

Not sure how a rubber fund will push up prices in the market though, in most countries supply and demand drive prices, but hey this is TiT land of interesting thinking.

[dru2]

international prices are not setup by the wish of some thai military pseudo politicians

Nor, clearly, by the past Yingluck administration.

[allan michaud]

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international prices are not setup by the wish of some thai military pseudo politicians

....or any of the other alleged 'politicians' in Thailand. Stupidity seems to be a national past time.

[Gonsalviz]

Looks like smoking accommodatios arein order.

[tonbridgebrit]

Those Thais who drive around in three-million-baht cars. How about tax THOSE people, and use the money to buy rubber and boost prices. At the same time, tell the rubber farmers to switch crops in the near future. Store the rubber, and sell it for a profit when prices do go back up again.

And, off-course, don't criticise Europe for carrying out it's large farm subsidies. Criticising Europe for handing out farm subsidies will make Thailand look hypocritical. Don't criticise Europe (and Japan and South Kores as well), learn from Europe, copy Europe, that might be the way forward.

[alant]

what is the difference between this attempt at price rigging and the things the western banks did and were heavily fined for on currency trading? (apart from this one has less chance of working)