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28 Nov 2006


Rubber Price Trend: Fluctuating in 2006…Worth Watching in 2007(Business Daily No.1901)


During the last half of 2006, rubber prices have been falling steadily. The decline could be attributed to many factors, e.g., rising rubber output during the rubber production season, rubber consuming countries decelerating their procurements pending a clear direction in rubber prices, and factories producing rubber products confronted with loss as a result of rising rubber prices caused by the Baht's appreciation, opting to cut their production. The affected local rubber growers cited the exchange rate loss as a reason for denting the prices of domestic rubber as they could not raise export prices. Meanwhile, the falling oil prices have resulted in lower prices of synthetic rubber (a substitute for natural rubber) which have thus pressured the price of its natural counterpart even more. Moreover, the fact that speculators in Thailand's Agricultural Futures Exchange (AFET) have turned to trading other commodities in lieu of rubber that has been on a bearish trend has also had much to do with the falling rubber prices at home.

However, rubber prices are projected to stay in the range of THB55-70 per kilogram during the last quarter of 2006 and continuing through 2007-2008. Subsequently, the rubber prices are expected to move mainly in line with supply and demand. Looking ahead, both supply and demand of rubber are expected to be on the rise. Indonesia and Vietnam are rubber producing countries which are worth watching, while China and India are among the interesting rubber consuming countries. Finally, even though the projected rubber prices are quite high, they are important to the survival of the rubber industry and rubber growers alike.

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