THAILAND: Rubber advances as government approves purchase plan for growers

The June-delivery contract gained 2.7% on 24 Jan. 2012 to settle at 314.20 a kilogramme (128 baht) on the Tokyo Commodity Exchange. The most-active month surged by as much as 3%, boosting this year's rally to 19%.

The cabinet yesterday granted approval for the Agriculture and Agricultural Cooperatives Bank to provide 15 billion baht at zero interest to rubber cooperatives and the Rubber Estate Organisation.

The money is for purchasing smoked rubber sheet (RSS3) with the aim of pushing up the price to 120 baht per kg after keeping 200,000 tonnes of stock.

The cabinet also approved using 1.32 billion baht from a reserve budget for management costs.

Thai prices advanced to their highest level in 12 weeks yesterday.

"The Thai policy was approved by the cabinet. That is the reason pushing the rubber market price," Gu Jiong, an analyst at commodity broker Yutaka Shoji, said by phone from Tokyo.

Investors are also concerned supplies may decline during the low production season in Southeast Asia.

Higher oil supported rates. The fuel rose on speculation that supplies may be disrupted by Iran.

Rubber may tumble in February and March if demand stays weak in China, the biggest consumer, said the Goldman Sachs Group.

Prices have been artificially inflated since Thailand announced its purchase programme and as users stockpiled more ahead of the Lunar New Year, said Goldman Sachs.

Apichart Jongsakul, secretary-general of the Office of Agricultural Economics, yesterday said raw rubber sheet price in Songkhla has risen sharply.

The government announced its price intervention policy on 17 Jan., and rubber has since risen to between 97 and 109 baht per kg from 85 baht, he said.

Source: Daily "Bangkok Post", Bangkok; 25 Jan 2012
(Syed Rashid Ali, Karachi, Pakistan)