Producers Waiting for Rubber to Rebound

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Bowls positioned to collect latex from rubber trees on a plantation in Ratanakiri province (Photo: Ethan Crowley).

By Cecelia Marshall for The Khmer Times

PHNOM PENH (Khmer Times) – Cambodian rubber producers are hopeful that easing global supply-side pressure will allow the commodity’s price to bounce back.

“I think that the sector is stabilizing a little bit and the market will rebound,” said one plantation manager.

International rubber prices have plummeted more than 60 percent since early 2011 due to drying demand in China, the world’s largest consumer of natural rubber. Sinking prices have driven many Cambodian rubber farmers to cut down their trees and switch to other crops, such as pepper.

But with major producing countries reducing stockpiles and scaling back production, there is optimism that rubber prices will bounce back.

Thailand, the world’s largest producer and exporter of rubber, recently announced that it would end subsidies to rubber farmers and encourage them to cut down some 160,000 hectares of rubber trees, or about eight percent of the country’s total. It also approved a plan to sell its 200,000-ton rubber stockpile.

“Now that Thailand is [trimming production], prices should level out by the end of the year and then begin to increase until 2020,” said Veasna Norng, managing director of Kol Veasna Investment, a rubber plantation in Kampong Cham Province.

Other major rubber-producing countries are taking measures to address the glut in world supply that is driving prices down.

Indonesia will impose a new tax that is expected to discourage production, while Vietnam is slashing its rubber export tax in hope of eliminating stock.

Indonesia and Vietnam are the second and third largest rubber producers, respectively.

The International Rubber Study Group (IRSG) predicts the global surplus of natural rubber will shrink 46 percent in 2015. The Singapore-based group said it expects demand for natural rubber to pick up on forecasts for record auto sales, while supplies will contract as small farmers account who account for 80 percent of global supply reduce tapping or switch to other crops.

Cambodian rubber farmers hope prices will start to recover before the next harvest.

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