Thailand, the world’s biggest rubber producer and exporter, may abandon measures to curb rubber exports when they expire on May 31 as they have failed to lift prices, a senior government official said on Friday. Thailand, Indonesia and Malaysia, the world’s top three rubber producers which together account for about 70 percent of world output, had agreed last year to cut exports by a total of 300,000 tonnes, or 3 percent of global production.
The move briefly supported prices but the effect was short-lived. Indonesia and Malaysia dropped their curbs when the scheme ended in March. Thailand extended the limits till May 31. “It is not appropriate for the current situation as prices are largely dominated by external factors and an action of Thailand alone is too small to have an impact on prices,” said Dumrong Jirasutas, head of the Department of Agriculture.
Rubber is a politically sensitive commodity in Thailand, where it provides a livelihood for around 1.3 million smallholders, mostly poor farmers who form a significant vote-bank for the government. Last month, Bangkok said it planned to offer loans to exporters to buy the commodity, helping absorb excess supply from the market. Traders and industry officials estimate the government to hold around 200,000 tonnes of rubber stocks.
Thai exporters welcomed a potential move to drop the export limits. “Thailand alone can’t move the world rubber market,” said Chaiyos Sincharoenkul, president of the Thai Rubber Association. A move to drop the curbs will likely weigh on prices next week, traders said, but limited supply should lend support.