Rubber meeting proposes floor price, supply cuts

Rubber meeting proposes floor price, supply cuts

Dow Jones, Bali

Senior officials from the world's top natural rubber producers
have proposed a floor price for the commodity at or near which
reductions in output and exports will be enforced, an Indonesian
official told Dow Jones Newswires Monday evening.

Restrictions to output and exports will be lifted only when
physical prices recover to a "reasonable level," said Suharto
Honggokusumo, executive director of the Rubber Association of
Indonesia.

"We have proposed the reference prices, the price range...The
objective is to reach a level that is remunerative for (rubber)
farmers," said Suharto.

He refused to say what the price range was.

Suharto is part of a team of Indonesian rubber officials who
attended a task force meeting in Bali Monday, to discuss plans to
form an International Tripartite Rubber Council, or ITRC, to help
shore up rubber prices at all-time lows. The other two parties
involved are Thailand and Malaysia.

A senior officials meeting is taking place Tuesday to finalize
details of the plans, prior to a ministerial meeting Wednesday
that is expected to approve the plans.

Under the tripartite agreement, Thailand, Indonesia and
Malaysia intend to cut rubber output by 4 percent and exports by
10 percent starting next year to help boost prices.

So far, Thai and Indonesian officials have announced
intentions to replant rubber plantations in efforts to control
output. As rubber trees can't yet be tapped in the seven years
after replanting, stocks are expected to decline during that
period.

Standard Indonesian rubber 20 grade is currently priced at
46.3 U.S. cents a kilogram, free-on-board for the January
shipment, down from around 63 U.S. cents per kg at the same time
last year and around 77 U.S. cents per kg two years ago.