Thread: Rubber trees 101

RAYONG, 12 December 2014 (NNT) – Fifteen Chinese importers of rubber today signed a memorandum of understanding (MoU) in which they agreed to buy 250,000 tons of rubber at the price of over 11,250,000,000 million baht.
The signing took place at a hotel in the central district of Rayong Province with 19 Thai rubber exporters signing on the suppliers’ behalf. The ceremony was also witnessed by Mr.Tassana Vichaithanapat, deputy governor of Rayong, Ms. Buniga Chaemsai, Minister Counsellor for Commercial Affairs at the Royal Thai Consulate-General in Shanghai and Ms. Suppara Seakacharn, Director of the Export Promotion Center of the International Trade Promotion Eastern Region Office.
Ms. Buniga said Thailand and China have long enjoyed close relationship in terms of trade, investment and tourism. China is currently the biggest market of Thai rubber due to its car industry. In 2013, the value of rubber exports to China was worth around 114,100 million baht or 45 per cent of the total export value. The figure has dropped to around 63,200 million baht this year.
Ms. Suppara of the International Trade Promotion Eastern Region Office said the MoU would be of great benefit to Thailand both in terms of income and market expansion.




Add to that, China's state buyer have bought another 500,000 MT in the last few weeks. Seems they are not going through the futures markets, Tokyo, Singapore and are paying in Yuan not dollars.
Don't know if it's a good sign or not, probably not, if long term contracts and prices are fixed the Thai government and suppliers are locked in. They will then try and holed prices down.


As said earlier, all sounds like market manipulation so China can corner the market in NR and SR. Bet deals like this are going on in Indo, Vietnam etc.
Cutting out the rubber futures exchange, buying at a fixed price in your own currency, no loses on exchange rates.

All of this and no price increase at all.

That works out at over 45,000 baht a ton. How does that price seem to you, Jim? How does it compare to recent prices?

Just out of interest (really I have none anymore) thought I'd ask the misses how the rubber trees are going and apparently they are tapping everyday but have sold none, just keeping it all and are up to 500 something or other maybe squares or mats or whatever they do with it and are waiting for March/April before going to sell it as for some reason they are expecting prices to have risen by then probably based on nothing more than the ramblings of the local monk.

Neverna, it's cheap all round, that's why I don't understand locking in prices like that.
Indonesian can't supply it's contracted rubber on time, prices are so low that plantations aren't producing.
Thailand is no different, production is way down, why anyone would lock into a fixed price, is beyond me.
You say you will supply something, in the future at X price, but you lose money on each kilo you sell, if you can get the rubber in the first place.

All very strange, much more behind it all, China is now the worlds biggest economy with plenty of reserve capital, it could take a year off and not be in debt.
Think they are making a play, manipulating markets, won't buy in US, people need to sell, buy in Yuan.

buriramboy, common belief here trees down time, no rubber, price goes up, not reality, rubber is warehoused and sold on the futures market, can store for about 2 years.
So seasons make little difference, but as few are making RSS [ high grade rubber] I believe there will be a large shortage. Money to be made, if you can afford to wait.
If I had the cash I would. Jim

China deliberately makes the price go down, buys up everything for the next few years at todays low prices , sells that rubber when the price goes up, nice profit ?

Originally Posted by jamescollister

All very strange, much more behind it all,

Wasn't there an agreement between Thailand's coup leader and Chinese delegation at the ASIAN summit to pay china with surplus rubber for the Fast Train construction by China? Rice was also considered for dumping in Chinas warehouses.

Quote:
Originally Posted by buriramboy
That works out at over 45,000 baht a ton.
At 1,000 kg to the ton that's 45 baht per kg, is this not a pretty good price. Compared to the current 20 + price it seems a very good base price.[/QUOTE]

20 Baht raw cup lump, 45 Baht is for TSR or processed rubber, tire grade.
Losing money for every kilo sold, not possible for private companies to lock themselves in to a long term contract that guarantees a loss.
Some back room dealings going on.

Farming and Gardening in Thailand.

webboard Rubber growers abandon plantations, output falls 25% in November



January is the peak season for natural rubber production in India, but this time monthly output in November was badly hit in the aftermath of a deep crisis in the market.

As the local market recorded only Rs 114 for a kg of RSS-4 grade rubber, there is 25% fallin production in November, according to estimates by Rubber Board.

The production was just 6,400 tones against 85,300 tones in the same month of 2013. If the trend continued, India will see steep fall in production during 2014-15, creating fresh crisis in the supply side.
Total yearly output may fall 10-12 % in full year and it may initiate a multiplier effect in the market as tyre majors will depend more on import as overseas markets are cheaper.

Experts say this could deepen the crisis further in the local market as there would be steep fall in prices and may lead to growers abandoning rubber plantations.

Benny Kuriakose, a local farmer told Business Standard that a major chunk of growers, mainly small and medium holders, had stopped tapping for the past couple of years and plan to dismantle the plantations.
“The average daily expense comes to the tune of Rs 1,200 -1,500 per acre and wages and earnings are too low. So it is advisable not to tap the plantations that means sharp fall in production for the last six months.”
He added, “The crisis might intensify further as government’s initiatives like procurement have failed miserably. Farmers have no way but to abandon the farms.”

To cap the climax consumption increased 12% in November at 85,000 tones and import had a jump of 19 % at 33,156 tones. This creates a paradox in natural rubber industry as the dependence on import will be a critical factor for the rubber based industries in India in future. Overall in April – November period import increased 15 % at 298,490 tones.

As the growers abandon plantations India will have to depend on South East Asia for rubber. This, in long run, will affect the supply side and the prices as India will turn out to be a net importer of rubber. So the current situation endangers not only the very existence of one million plus farmers, but the availability of rubber in India in the future.


Would think similar decrease in production here, so what surplus.
Also note RSS has gone up everyday this week, still too low for me to mark sheet, as it will be for others.
Touch wood prices have bottomed out, market forces, supply and demand, not market manipulation will take over. Jim

So everyone is chopping their rubber trees down .
This will cause a shortage in the future .
This will cause the price of rubber to rise .
People will then plant rubber trees again .
This wil take seven years to grow .
In which time the price of rubber will rise , due to a shortage .
The financial market men who have bought future rubber at these low prices , will be able to sell that rubber at the future high price ?

Originally Posted by Fluke

So everyone is chopping their rubber trees down .

That's a bit premature. I've seen no sign of rubber trees being bulldozed. They're still tapping and producing sheet around where I live.

Originally Posted by Pragmatic

Originally Posted by Fluke

So everyone is chopping their rubber trees down .

That's a bit premature. I've seen no sign of rubber trees being bulldozed. They're still tapping and producing sheet around where I live.

A few posts back, pages , posters were reporting that they are cutting down rubber trees (in Thailand), not everyone, but some people are , as they are in India .

The government were offering compensation to those that cut down their trees but there's no proof of that they're paying out. No confirmation of payments, so I doubt people are jumping just yet.

We're certainly not chopping ours down- they're only striplings. Maybe, when the time comes to tap, rubber might be worth tapping again? There is alway a considerable opportunity cost attached to changing land from one type of crop to another- usually the latest 'hot crop''. Cassava, sugar, rubber, all been ramped up, and then dumped. Since I've been here. So chop down rubber, go with the latest 'hot crop', and get dumped on again. Ever wonder why farmers increasingly lose their land? It's the commodity markets, combined with their own naivete'.

People are chopping down trees, but they are older, less productive clones.
Sabang, rubbers fairly new to Issan, not to many old plantations, older clones bigger trees, say 30,000+ lumber value and 20,000 Gov. grant, worth getting rid of low production trees.
I have not seen any new plantations planted this year, people seem to be going for the newer cassava clones, fast growing, bigger tonnage, cash crop.

Some are planting cashew nuts, less labor intense and a steady demand, anyones guess what tomorrows prices will be for any thing.

If I had spare cash, I'd be planting nutmeg in the rubber plantations, they need the shade to grow. Another income to put the kids through Uni wouldn't hurt. Jim

Originally Posted by jamescollister

If I had spare cash, I'd be planting nutmeg in the rubber plantations,

Nutmeg is a tree isn't it? Or a bush? Anyway, would you plant inbetween your rubber trees? How much cash is required? For how much land for growth? Wheres the established market? What's the market value after harvest?

Why not coffee or tea depending on location I suppose? What about coco?

Lots of acres around here growing chilies, pumpkins, corn, soybeans, red beans, cassava, rubber and rice. Same here, nobodies cutting down their rubber trees. Lots hitting the bank up for government payments, loans on land, and retirement stipend. 600baht at 60, 700 baht at 70, and so on. Don't see a lot of red plates this year.

Speaking to two farangs last night who farm 90 rai of mature rubber in between them who informed me they both had ceased tapping over two months ago ,and decided to do nothing with both adopting a wait and see attitude and do nothing ,I suppose that is OK for them as both are quite wealthy anyway , no such luck for other Thai farmers in my area though ,Jan was talking to ones wife in the Market a few days ago who said her husband had got a job in Korat just to survive .

Originally Posted by ltnt

Originally Posted by jamescollister

If I had spare cash, I'd be planting nutmeg in the rubber plantations,

Nutmeg is a tree isn't it? Or a bush? Anyway, would you plant inbetween your rubber trees? How much cash is required? For how much land for growth? Wheres the established market? What's the market value after harvest?

Why not coffee or tea depending on location I suppose? What about coco?

Lots of acres around here growing chilies, pumpkins, corn, soybeans, red beans, cassava, rubber and rice. Same here, nobodies cutting down their rubber trees. Lots hitting the bank up for government payments, loans on land, and retirement stipend. 600baht at 60, 700 baht at 70, and so on. Don't see a lot of red plates this year.

http://www.spices.res.in/pdf/package/nutmeg.pdf


Doesn't seem much of a market in Thailand, not grown here by the look of it.
But China is not far away and they buy it.

Seems to have taken off in the rubber producing areas of India, planted between rows of rubber, shade.
Farm gate price, guess $10 US a kilo, as the wholesale price is around $20.
Cost would mainly be getting the clones shipped in, so no idea how much, have no money so not looked to far into it.

Originally Posted by jamescollister

Cost would mainly be getting the clones shipped in

From India? Warm dry climate or high humidity wet climate? N.East or N.West Thailand climate suitable? Would you be able to sell to China at a rate competitive with India?

Originally Posted by ltnt

Originally Posted by jamescollister

Cost would mainly be getting the clones shipped in

From India? Warm dry climate or high humidity wet climate? N.East or N.West Thailand climate suitable? Would you be able to sell to China at a rate competitive with India?

Rubber in India is mostly grown in the Kerala area, similar rain fall to where I live.
Wages there are around $10 US a day [300 Baht] Indo would be the main competition, as India uses most of it own produce internally.
Don't know much about exporting, but would guess trucking from Thailand [or train in the future] would be competitive.
As said not really gone to deep in to it, came up on an Indian rubber forum I'm on and have a friend in Ubon, who is a manager in a BOI company exporting agro crops.
Again, need money up front and a long wait before a return.

Have to wonder about some of these alleged commodity experts opinions, wish some one would pay me to make baseless predictions.
Bloomberg, last week, rubber to remain soft next year, due to 300,000 ton world oversupply.
Month before, Thai rubber board predicting 10% decrease in 2014 of output from 2013.
My be my maths are bad, but Thailand produced 4 point 7 mil M/T 2013, 10% drop would be 470,000 MT less.
By my reckoning that's 170,000 M/T under-supply there alone, never mind places like India with a 25% drop.

Tire companies in India are so worried about the coming shortage that they are going to pay 25% over the market price, to keep the plantations going.

Good years and bad, 2011 was good, 2008/9 was bad, 2012 started the fall, fingers crossed, just the cycle and 2015 is upturn time again. Jim

Natural Rubber in Indonesia Update: Export & Production

Indonesia Investments
23 December 2014 | Indonesia Investments
Subjects | Daud Husni Bastari, Rubber Price, Rubber Export, Rubber Industry, GAPKINDO, Indonesian Rubber Association, Natural Rubber, Rubber Production, Rubber, Commodities

Indonesia’s export of natural rubber is forecast to reach 2.58 million tons in 2015, roughly similar to this year’s expected export performance but a 10 percent decline from the country’s rubber export in 2013. This year, local rubber companies have been negatively affected by sluggish global demand triggering international rubber prices touching three-year lows. Rubber production in Indonesia in 2014 is expected to reach 3.5 million tons, of which 90 percent is exported abroad (mostly to the USA, Japan, China, India and Brazil).

Indonesian rubber production in 2014 has been curbed by various matters, such as abundant rainfall at the start of 2014 and rubber producers’ lack of enthusiasm to plant rubber trees amid low rubber prices. Currently, the global rubber price is roughly USD $1.48 per kilogram, below production costs and therefore opting for other crops (for example palm oil) is more lucrative.

Chairman of the Indonesian Rubber Association (Gapkindo) Daud Husni Bastari targets rubber exports in the range of 500,000 and 600,000 tons in the first quarter of 2015. He added that the Indonesian government should spur domestic usage of rubber (for example using rubber in asphalt) in a move to boost rubber production.

Indonesia is the world’s second-largest rubber producer. Since the 1980's Indonesia’s rubber industry has grown steadily, with most rubber plantations located on the island of Sumatra. The government and large private estates play a minor role in the country’s rubber sector. Most of the rubber production - around 80 percent - is produced by smallholder farmers.

Jim,

Right about commodities futures reports. You can find whatever results your heart desires in these reports I find. There's a Thai company called Thaitex Group that manufactures things like medical gloves and FDA type products. They report buying about 3MT of rubber alone annually for export products. If you want daily updates or don't have them already, on USA rubber price Index use the previous exmundi.com site for quotes as well as graphs/charts on history of all commodities not only rubber.

Sold cup at auction this week in Udon Province at 21.60 baht per kg.