Government’s rubber purchasing plan has driven up market prices

[rooster59]

Government’s rubber purchasing plan has driven up market prices



BANGKOK: Rubber Authority of Thailand’s plan to purchase up to 100,000 tonnes of rubber from rubber farmers at a maximum price of 45 baht/kg has fallen far short of the target but the programme has driven up market prices.

RAT governor Chao Song-arvuth said Friday that RAT had purchased through its trading points only 2,857 tonnes of rubber sheets, cup rubber and latex worth a total 120 million baht from 26,400 farmers during January 25-March 10.

He admitted that the amount of rubber bought by RAT was small compared to the set target of 100,000 tonnes. However, he noted that the purchase had helped drive up rubber market prices to 42-43 baht/kg compared to 34-35 baht/kg a few months earlier.

Mr Chao disclosed that a total of 753,000 farmers have joined the government’s rubber subsidy programme which ended on February 29. Under the programme, each farmer who owns a maximum of 15 rai of rubber plantation will receive 1,500 baht/ rai in subsidy.

Out of the 753,000 farmers registered, 661,000 have received the subsidy totaling 4,911 million baht. The recipients include 337,000 farmers and 323,000 rubber tappers. The rest will get their pays within March 15.

Meanwhile, Agriculture Minister Gen Chatchai Sarikalya will pay a visit to Malaysia’s rubber research institute to find out if any research works can be applied for use in Thailand.

The minister said that, if it is necessary, the research works may be bought for application instead of waiting for domestic research works.

Source: http://englishnews.thaipbs.or.th/content/154738

-- Thai PBS 2016-03-12

[leeneeds]

Buying 2857 tons of rubber from a target of "100,000 tons" left to buy 97143 tons,

No need to buy as they have pushed up the price by 8 baht / kg

so the dilemma , do we sell now or wait ?

" you can fool all the people some of the time, and some of the people all the time, but you can not fool all the people all the time"

(credited) Abraham Lincoln.

[phoenixdoglover]

The planned purchase of 100,000 tons was about 2.3% of annual output. Actual purchase of less than 3,000 tons could not affect prices except on a very local scale. On the main Singapore market, reflecting broad value, there has been a small increase in price of smoked sheet rubber since January.

The RAT governor is waxing eloquent, and brimming with optimism, but I wouldn't rely on his announcement.

Edited March 11, 2016 by phoenixdoglover

[starky]

Course it has. Good one junta your the best. You have much better thought out and implemented policies than that other mob and the progress you have made on your numerous crackdowns has been astounding, particularly against Mafia types and people of influence. Hoorah

[Nigeone]

Am I missing something here?? So government offers to buy rubber at 45bht kg and the market price is 42/43bht kg...So why can't they buy more than they have ! Me thinks someone's not telling the true story...And can't believe the farmers wouldn't take the higher price if it's offered.! It's all about now !!

[aussieinthailand]

Am I missing something here?? So government offers to buy rubber at 45bht kg and the market price is 42/43bht kg...So why can't they buy more than they have ! Me thinks someone's not telling the true story...And can't believe the farmers wouldn't take the higher price if it's offered.! It's all about now !!

"Am I missing something?" Yu'p you are.

[cloudhopper]

Hooray higher prices for all to pay! That is the inevitable result of government subsidies.

[jerojero]

Shades of the Rice scheme?

[Nigeone]

Am I missing something here?? So government offers to buy rubber at 45bht kg and the market price is 42/43bht kg...So why can't they buy more than they have ! Me thinks someone's not telling the true story...And can't believe the farmers wouldn't take the higher price if it's offered.! It's all about now !!

"Am I missing something?" Yu'p you are.

Explain please !?

[robblok]

The planned purchase of 100,000 tons was about 2.3% of annual output. Actual purchase of less than 3,000 tons could not affect prices except on a very local scale. On the main Singapore market, reflecting broad value, there has been a small increase in price of smoked sheet rubber since January.

The RAT governor is waxing eloquent, and brimming with optimism, but I wouldn't rely on his announcement.

I might not agree with many of your opinions, but this one is well built with facts and is so logical it will be hard for anyone with half a brain to discredit.

[ChrisY1]

Just another general (pseudo minister) trying to impress with his achievements.......in reality, nothing substantial has happened.

[Eric Loh]

The planned purchase of 100,000 tons was about 2.3% of annual output. Actual purchase of less than 3,000 tons could not affect prices except on a very local scale. On the main Singapore market, reflecting broad value, there has been a small increase in price of smoked sheet rubber since January.

The RAT governor is waxing eloquent, and brimming with optimism, but I wouldn't rely on his announcement.

The small increase in global pricing was a knee jerk reaction to the tripartite agreement between Indonesia, Malaysia and Thailand to decrease production. It will gradually adjust back to reflect the real market situation of poor demand and suppliers sourcing away from the big three. The African countries, Mynmar, Cambodia and Vietnam are alternative source of supply.

[rubl]

Am I missing something here?? So government offers to buy rubber at 45bht kg and the market price is 42/43bht kg...So why can't they buy more than they have ! Me thinks someone's not telling the true story...And can't believe the farmers wouldn't take the higher price if it's offered.! It's all about now !!

"Am I missing something?" Yu'p you are.

With the limits and possibly the unavoidable paperwork I doubt many really wanted to bother. The government was seen as doing something, registered farmers got their 1,500 Baht subsidy max. All happy.

[Srikcir]

As of March 4, 2016 the International Rubber Consortium Ltd price for April 2016 for RSS 3 (loose sheet) is Bt46.25/kg compared to the Bt45 being paid by the government. So market prices have been driven up, albeit by the consortium of Indonesia, Malaysia and Thailand; IRCO is like OPEC. With the government land subsidy included as a production cost offset, April's futures essentially still puts the government in a net loss position.

But it's debatable that prices increased directly due to Prayut's small purchases or more due to Indonesia, Malaysia, Vietnam and India cutting production. Auto manufacturing orders for tires are down almost 20%. But Thailand doesn't appear to be cutting production, and with increased government subsidy incentives, Thai rubber farmers are likely to increase production.

However, even prices at Bt50 the rubber farmers throughout 2015 wanted a minimum of Bt60 with a goal of Bt80 in order to make a sustainable profit margin. I suspect that with the current market price improvement, rubber farmers will revive their demands again for a minimum of Bt60. They are not done with Prayut yet and may use the upcoming draft charter referendum to futher pressure Prayut for increased subsidies. Political loyalty doesn't always come free.

[rubl]

As of March 4, 2016 the International Rubber Consortium Ltd price for April 2016 for RSS 3 (loose sheet) is Bt46.25/kg compared to the Bt45 being paid by the government. So market prices have been driven up, albeit by the consortium of Indonesia, Malaysia and Thailand; IRCO is like OPEC. With the government land subsidy included as a production cost offset, April's futures essentially still puts the government in a net loss position.

But it's debatable that prices increased directly due to Prayut's small purchases or more due to Indonesia, Malaysia, Vietnam and India cutting production. Auto manufacturing orders for tires are down almost 20%. But Thailand doesn't appear to be cutting production, and with increased government subsidy incentives, Thai rubber farmers are likely to increase production.

However, even prices at Bt50 the rubber farmers throughout 2015 wanted a minimum of Bt60 with a goal of Bt80 in order to make a sustainable profit margin. I suspect that with the current market price improvement, rubber farmers will revive their demands again for a minimum of Bt60. They are not done with Prayut yet and may use the upcoming draft charter referendum to futher pressure Prayut for increased subsidies. Political loyalty doesn't always come free.

A lot is debatable, especially how you put things together.

Wasn't Thailand involved in a meeting of the major rubber producers? Isn't the subsidy a mere token, a gesture only? Isn't the government promoting alternative crops, improved production methods to increase quality rather than quantity?

[Waldkater41]

How funny.........government subsidy brought the prices on the market up???????? <deleted>