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Agriculture Ministry, private sector set up fund to stabilise rubber price

Jun 14. 2013
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By Yupin Pongthong
The Nation

The Ministry of Agriculture and Cooperatives and seven private entities are setting up a Bt210-million rubber-price stability fund on the Agriculture Futures Exchange of Thailand (AFET), said Deputy Minister Yuttapong Charasathien.
The objective of this fund is to buy rubber via AFET because the future price of rubber for delivery next January is Bt78 per kilogram, which is unusually low, compared with the prevailing price of Bt85 per kilo. 
Each of the seven alliance members will contribute Bt30 million for a total contribution of Bt210 million to set up this rubber price stability fund. This would support an average of 300-400 rubber-sale contracts per day, which is adequate to create positive sentiment, boost confidence in the market’s liquidity and attract more investors when compared with the average trading volume of 300 contracts a day. 
The aim is to promote Thailand as a major rubber-trading hub and establish a reference price for rubber in the future. Moreover, this would boost income for Thai rubber growers. 
This fund can buy 50,000 tonnes of rubber, which is sufficient to keep the price from falling abnormally as in the current situation, which was fuelled by news that the Thai government had been buying up rubber and built up an inventory as high as 500,000 tonnes. That caused the world’s rubber price to remain stagnant. 
The seven private entities contributing to the rubber fund are: the Rubber Estate Organisation, the International Rubber Conference Organisation, Thai Hua Rubber, Sri Trang Agro-Industry, Thai Rubber Latex Corporation (Thailand), Southland Rubber Co and Von Bundit Rubber Co. 

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