Natural rubber output from key growers may rise 4.8%

Natural-rubber supply may expand 4.8 per cent this year as planting area increases and high prices prompt farmers to continue tapping into the low-production season, boosting supply in February, a producers’ group said.

Production from members, which represent 92 per cent of global supply, may total about 9.9 million metric tons this year, the Association of Natural Rubber Producing Countries said in a monthly bulletin today. That is lower than an “optimistic target” by member governments of 7.7 per cent growth to 10.2 million tonnes, it said.

“Natural-rubber supply is unlikely to increase beyond 4.8 per cent during 2011” as some farmers will uproot old trees for replanting, the group said. “The present tightness in the market could be continued if demand grows faster than supply.”

Rubber futures in Tokyo have gained 13 per cent this year, extending last year’s 50 per cent rally as rising car sales led by China and India boost demand, while rains disrupted tapping in the key growing nations of Southeast Asia.

“Supply this year may not increase that much, as persistent rains have lowered production across Southeast Asian countries,” Umaporn Thepnuan, senior marketing official at Future Agri Trade Co., said by telephone from Bangkok. Supply concerns and strong demand will continue to support prices, Umaporn said.

Tapping Prolonged
Supply in February from members of the group could be above average as higher prices motivate farmers to continue tapping until the end of February, the group said. Growers typically reduce tapping during the leaf-shedding season that begins in next month.

Output in January is expected rise 2.9 per cent to 866,000 tonnes, slower than 13.5 per cent growth in the same period last year, it said.

Production in Thailand, the world’s largest supplier, may rise 5.4 per cent to 3.25 million tonnes this year, the group said, citing a government target. Indonesia is expected to produce 3.08 million tonnes, an 8.1 per cent increase. Output from Malaysia may grow 8.2 per cent to 1.05 million tonnes it said, citing government targets.

Consumption from the group’s member countries is expected to rise this year. China, the largest user of natural rubber, may consume 3.6 million tonnes, 9 per cent more than last year.