March 09, 2010, 4:49 AM EST
By Supunnabul Suwannakij
March 9 (Bloomberg) -- Natural rubber output in Malaysia, the world’s third-largest grower, may rise 17 percent this year, lifting shipments of the commodity used in tires, the nation’s minister for plantation industries and commodities said.
Production may reach 1 million metric tons as farmers boost tapping to benefit from higher prices, Bernard Dompok said in an e-mail. Output last year was 856,189 tons.
Rubber futures traded in Japan have advanced 7 percent this year, after doubling in 2009, as production fell and the global economic recovery and government stimulus measures in China and U.S. boosted demand for tires. The price retreated from a one- week high today after Malaysia forecast an increase in output.
“Higher supply from Malaysia hurts market sentiment in the near term,” said Chaiwat Muenmee, an analyst at DS Futures Co. “That prompted some investors to unwind positions.”
August-delivery futures, the most-active contract, fell as much as 1.4 percent to 293.1 yen a kilogram before settling at 295.10 yen on the Tokyo Commodity Exchange. The drop ended a two-day, 4.5 percent winning streak.
Still, the global economic recovery “looks favorable for the natural rubber market to stay bullish amid a tight supply situation caused by a decline in regional production and a marked rebound in demand,” Dompok wrote in reply to questions.
Output during the seasonal low-production period between February and April, so-called “wintering season,” will surge in Vietnam, Malaysia and India, the Association of Natural Rubber Producing Countries said March 1.
Malaysian Exports
In Malaysia, low-season output will increase 43 percent to 243,000 tons, according to the group that represents Cambodia, China, India, Indonesia, Malaysia, Papua New Guinea, Sri Lanka, Thailand and Vietnam.
Malaysia’s exports of rubber and rubber compound may rise 6.2 percent this year to 1.2 million tons, Dompok said. Sales were 1.13 million tons last year, including 430,000 tons of compound rubber sold mostly to China, he said.
The government will maintain a minimum tappable plantation of 800,000 hectares and ensure that at least 25,000 hectares are replanted to meet the 1 million ton output target, Dompok said. It aims to increase the average productivity to 1,800 kilograms per hectare per year by 2020, from 1,450 kilograms, he said.
Imports will increase 1.5 percent to 750,000 tons this year to meet demand for compound rubber from China, and to supply domestic latex-goods manufacturers, he added.
(businessweek.com)
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