Asian rubber futures settled mostly lower Thursday as prices were pressured by the prospect of even more of the commodity on the market after Thailand’s agriculture minister said a day earlier that the government is planning to sell from its 200,000-ton stockpile.
Although the minister, Yukol Limlamthong, said the government won’t be selling the stocks when prices are too low, so as not to further damp market sentiment, participants said the comments sent jitters throughout the market, which was already depressed because of concerns about large stockpiles in China and Japan.
The International Rubber Consortium said on its website Thursday that the Thai government has informed the organization that it has “not made any decision to sell its current natural rubber stocks to the market.”
The Thai authorities will only “consider (selling) them if and when the market price of natural rubber is appropriate,” IRCo added.
Thailand is the world’s largest producer and exporter of natural rubber.
Benchmark September natural rubber on the Tokyo Commodity Exchange hit a one-month low before settling 1.8% lower at 222.7 yen a kilogram, although the front months of April and May settled higher, reflecting tight supplies in the current low-production season.
“If benchmark prices breach the Y220/kg level decisively, prices are likely to be very volatile in the Y200-Y220/kg range,” said a Singapore-based dealer.
Physical rubber prices were mixed with some grades supported by the continuing wintering season.
03 April 2014, 18:45 PM, Dow Jones