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20 August 2009

Slow output expected to shore up rubber prices 

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Natural rubber output in Thailand, Indonesia and Malaysia dropped 13 percent to 3.02 million tonnes in the first half of this year as fewer trees were tapped, supporting prices, Reuters quoted industry sources as saying Wednesday.

A recovery in the second half could be limited, especially after heavy rains hit rubber plantations in main producer Thailand just after the dry-wintering season ended in May, and second-largest producer Indonesia braces for a severe drought, they said.

Ageing trees, a replanting programme launched last year by the three main producers to prop up prices and erratic weather contributed to a fall in output in the first six months of 2009, the Association of Natural Rubber Producing Countries (ANRPC) said.

Thailand, Indonesia and Malaysia account for 70 percent of global rubber output, according to the ANRPC, which also groups India, Vietnam, China and Sri Lanka.

"The present higher rate of replanting shadows the planting boom of the 1980s," the group said in its August report.

"Replanted trees take six to seven years to start yielding. That means, replanting results in shrinkage in yielding area. "Excess rains had also restricted tapping, while plantations in Malaysia, in particular, were hit by higher morning temperatures that curbed the latex flow." "A drop in production should support the prices," the group said.

The ANRPC said Thailand's production fell 12.4 percent to 1.304 million tonnes in the first half this year compared with the same period in 2008. Indonesia's production contracted 6 percent to 1.341 million on the first half, while Malaysia's output dropped 32.6 percent to 378,300 tonnes.

Quoting government data, the group said tapped areas in Indonesia were expected to fall to 2.7 million hectares in 2009 from 3.4 million hectares last year. Malaysia's tapped areas were estimated to drop to 740,00 hectares this year from 1.2 million hectares last year. There was no data yet from Thailand, said the group.



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