Thai government buys and sells rubber prices

Although the natural rubber market is affected by the weakness of the international and domestic economies, the low consumption of the downstream auto industry, the European debt crisis, the supply season in Southeast Asia and many other negative factors, in the short term, the Thai purchase and storage incident is still an important factor affecting the price of natural rubber.

Last weekend, Japan’s Jiaojiao and Hujiao’s two-way trade broke through, with the Hujiao Index hitting a new high of nearly 3 months since October 17 last year’s high, reaching a price of 29,325 yuan per ton, and Hujiao’s main contract RU1205 price also hitting a close. New highs for more than three months have reached 29,340 yuan per ton. I predict that the natural rubber market will be affected by the Thai government's purchase and storage. After a moderate adjustment, the price will challenge the new high.

Thailand's natural rubber storage has a great impact on China's market. Because Thailand has become the world's largest producer and exporter of natural rubber since 1991, 92% of its output is for export, and China is one of its major consumers. On January 17, the Thai Rubber Board reported that the Thai government plans to invest 17 billion baht (about 530 million U.S. dollars) in storage and insured prices. The entire plan will last for 1 year from January 2012 to March 2013. For a long time. On January 24th, with the approval of the cabinet, Thailand's purchase and storage of natural rubber raw materials has been basically finalized. The government will use huge sums of money to purchase USS3 plastic blocks at a price of 120 THB/kg (about US$3852/ton). The storage and storage prices directly support the spot price, while the purchase and storage scale enhances the market's expectation of supply reduction.

Although the details of the specific storage and storage methods and quantities are not yet clear, the role of the pre-emptive insured price will soon appear. At present, the comparison of spot rubber prices in Southeast Asia production areas shows that not only the spot price of Thai No. 3 rubber and spot price of No. 20 have risen by more than 10 cents/kilogram, but also the spot price of Thailand No. 20 rubber is higher than spot prices of Indonesia and Malaysia No. 20 rubber. Thailand's rubber prices have taken the initiative to rise. The market outlook will drive the Indonesian and Malaysian rubber prices to rise passively, which will also drive the price of natural rubber in China.

However, from the perspective of the overall supply, the Thai government's purchase and storage have a limited impact on the global natural rubber prices including China. The annual output of Thailand's natural rubber is 3 million tons, and the annual global production is 11 million tons. According to Thailand’s proposed use of funds, the Thai government’s acquisition scale is equivalent to only 4.17% of Thailand’s natural rubber production and 1.14% of global natural rubber production. According to the latest statistics, Thailand's natural rubber stocks reached 473,900 tons in January, an increase of 44.35% year-on-year. Therefore, the influence of purchasing and storage plans on the bullishness of the rubber market in Thailand and the global rubber market comes from the psychological level.

From the perspective of cost analysis, the cost of rubber planting in Thailand is around 60 baht/kg, while the current price of rubber raw materials in southern Thailand has climbed above 110 baht/kg. In the future, as long as the rubber market price stays above the cost price, the Thai government will spend more money. The possibility of continuing to store and store rubber will be less.

In summary, since the purchase and storage will continue for more than a year, the natural rubber market will continue to maintain its upward trend. However, it is limited by the scope and scope of the storage.