* Thai government plans to sell stockpile as soon as possible
* Thai farmers plan say to stage protest
* Tyre grade prices at multi-year lows on China concerns
By Lewa Pardomuan
SINGAPORE, May 7 (Reuters) – Global rubber prices tumbled towards their weakest in more than four years on Wednesday, as plans by top producer Thailand to sell the commodity it had purchased from farmers to support prices ratcheted up pressure in an already depressed market.
Benchmark Tokyo rubber futures sank more than 4 percent as trading resumed after a two-day holiday. The most active October contract hit a low of 197.3 yen a kg, not far from a 4 1/2 year low of 196.7 yen struck in late April.
Thailand had planned in April to release about 200,000 tonnes of rubber during the current wintering season, when latex output drops. But no sales were made, and caretaker Agriculture Minister Yukol Limlaemthong told Thai media last week the stocks would be released soon to avoid further losses.
Thai rubber farmers said they will gather in Bangkok protest against the plan, while in rival producers Malaysia and Indonesia, some tappers have stopped tapping, looking for other jobs as tyre grade prices launguish near 5-year lows.
“All the bad things seem to happen at the same time,” said Edy Irwansyah, executive secretary of the North Sumatran branch of the Indonesian Rubber Association, which groups exporters in the world’s second-largest producer.
“This is going to further weigh on prices. I would think that Thailand should find ways to boost domestic consumption.”
Tokyo rubber futures, which also set the tone for tyre grade prices, have tumbled down more than 25 percent this year on fears about falling demand in China, the world’s biggest rubber consumer.
China’s economic growth is likely to slow to 7.4 percent in 2014 from 7.7 percent last year due to the government’s drive to curb credit risk and excessive factory capacity, the OECD said on Tuesday.
On Singapore’s SICOM exchange, the TSR20 contract – which covers Thai, Indonesian and Malaysian grades – held near its weakest since mid-2009. In Thailand, the price of unsmoked rubber sheet, which farmers sell to factories, has slipped more than 20 percent.
The tyre-making industry makes up about 60 percent of global rubber consumption. Rubber is also used to make gloves, condoms and products in transport, construction, health and mining.
“I expect to see further erosion of the market,” said a dealer in Singapore. “It is quite frightening to understand that these people run a country … in view of the fact that they bought the rubber to support the market.”
Thailand has spent 22 billion baht ($680 million) buying rubber from farmers from October 2012 to May 2013 without making much impression on prices. Thailand may produce 4.0 million tonnes of rubber in 2014, of which around 80 percent is for exports.
There were no signs the International Rubber Consortium (IRCo), which represents rubber producers in Thailand, Indonesia and Malaysia, will intervene to support prices. ($1=32.35 baht)
(Editing by Ed Davies)
– Reuters
