Rubber prices may plunge this month

Rubber prices may plunge this month

SINGAPORE (Reuter): Rubber prices, now buoyed by seasonal
factors, could move lower in coming weeks as the market lacks
strong fundamental support, delegates at an industry meeting said
yesterday.

They said at the ASEAN Rubber Business Club meeting that firm
prices, supported by unusually heavy rains and the current
wintering period when latex flow is minimal, were favorable for
both growers and traders.

"But we should be cautious as the current price increases are
not structural," A.F.S. Budiman, executive director of the Rubber
Association of Indonesia (Gapkindo) told Reuters in an interview.

He said that the meeting also discussed the plight of Thai
traders who have lost rubber shipments bound for China.

At least three cargoes have gone missing on the high seas in
recent months, with the latest case involving a consignment of
3,400 tons of rubber, Budiman said.

"The latest case is in the hands of Interpol," he said without
elaborating. China is a major buyer of Thai rubber.

Indonesia, Malaysia and Thailand are the world's largest
producers of natural rubber and are all members of ASEAN, the
Association of South East Asian Nations. ASEAN also groups
Brunei, the Philippines, Singapore and Vietnam.

Budiman said the current wintering period -- when trees shed
leaves and production declines -- followed heavy rains and floods
in some of Indonesia's key growing areas.

"There's been a shortage of rubber since early this week,
compared with last year, because of the heavy rainfall and this
has pushed prices higher," he said.

Indonesian benchmark SIR20 rubber is fetching 69 U.S. cents a
pound, up from around 55 cents six months ago but down from
around 80 cents a year ago.

Wintering, which started in February, could last until April.

Budiman said despite high prices, global demand, with the
exception of China, was quite constant. The Chinese are likely to
stay out of the current market until prices move much lower, he
concluded.