
On 16th. April 2010, EMP Malaysia bid farewell to Farid, our trainee product designer from January to April 2010.
The Office of the Rubber Replanting Aid Fund (ORRAF) plans to groom 12,000 para rubber experts over the next four years to support expansion plans and cope with an expected industry boom.
These rubber experts, or mor yang in Thai, will help instruct new planters and train them in how to grow and tap the trees in addition to processing for various rubber products.
Director-general Wit Pratuckchai said the Office planned to launch the second phase of its initiative to expand plantations, with a target of 800,000 rai in new growing areas by 2012.
The first 100,000 rai are planned for this year, 300,000 next year, and 400,000 rai in 2012. About 550,000 rai are in the Northeast region, with the rest spread over the North and central provinces.
As a para rubber tree takes seven years to mature for harvest, he expects the new fields will increase natural rubber supply by 224,000 tonnes per year from 2017.
The Office has 3.97 billion baht to fund the project, with 2.82 million for saplings, fertiliser and other essentials over the first three years. About 800 million baht will be used for training and 350 million for management.
The second phase has been scaled down from an initial one million rai, following a first-phase planting of one million rai from 2004-06.
The expansion follows the ORRAF’s goal to add between 80,000 and 160,000 new rubber planters.
The policy targets small planters with 2-15 rai of land, and it is expected to earn each of them a minimum of 112,000 baht per year, based on rubber prices of 100 baht per kilogramme.
The Office is confident the industry’s bright outlook will attract new growers though many of them have no experience in rubber growing, which is typically more popular in the South.
‘‘We have 120 staff who will train the first 1,200 rubber experts starting next month,’’ he said.
The trainees from villages and farm co-operatives will undergo a threemonth course on management to support the growing industry.
Strong demand from the automobile industry due to the global recovery as well as market speculation have driven rubber prices to record highs.
Ribbed smoked rubber sheets (RSS3) for May delivery reached 128 baht a kilogramme this week, more than double the 57-baht average in the same period of 2009.
Although the industry is booming, Mr Wit cautions planters to carefully manage their supply to minimise risk.
Extremely high prices could fluctuate from speculation, leading to default risk on orders by exporters.
Planters will be happy with 80 to 100 baht per kg, considering 50-60 baht for production costs, he said.
Rise in global demand, tight supply among factors
PETALING JAYA: Rubber is one of the hottest commodities traded so far this year with price rallies seen in most international rubber exchanges.
Tyre-grade Standard Malaysian Rubber (SMR 20) has also been hitting new highs particularly in the past three months and currently trading above the RM10,600 per tonne level.
According to Association of Natural Rubber Producing Countries (ANRPC) director-general Prof Djoko Said Damardjati, tightness in rubber supply would remain an issue amid an upsurge in demand from China and India for their booming auto and tyre manufacturing industries.
“Severe drought, the current wintering season as well as active replanting activities in most major producing countries could affect rubber output.
“Even the preliminary estimates from members of ANRPC indicate that the global rubber supply is unlikely to rise above 6% this year,” he told StarBiz recently.
ANRPC had earlier estimate that global rubber production could reach 9.5 milllion tonnes this year, up by about 6.3% from last year’s 8.9 million tonnes.
Djoko also expected rubber supply to remain tight until 2011. A large extent of existing yielding trees in major producing countries were planted in 1980s.
“Most of the trees planted have reached declining yield phase, thus the age composition of the existing yielding area is unfavourable for yield improvement,” he added.
Djoko noted that Indonesia and Malaysia had undertaken active replanting activities since 2005.
“I believe rubber prices will remain firm for quite some time until supply recovers, possibly by early 2012.”
Apart from the buoyant demand and drought-ridden supply, he said other factors influencing the rubber market included the weakening US dollar, volatility in yen and the increasing crude oil prices.
Members of the ANRPC countries account for about 94% of the total world natural rubber production.
Interestingly, more than 45% of global consumption of natural rubber is in China, India and Malaysia, which are the major consuming countries in the ANRPC.
ANRPC in its latest report said imports from China during January to February surged 63% for natural rubber and 118% for compound rubber compared with the same period last year.
During the same period, India posted a 17% increase in natural rubber consumption, given the large-scale capacity in its auto tyre manufacturing operation.
Meanwhile, Hwang DBS Vickers Research has also raised its 2010-2012 forecast rubber prices by 39% to 44% as its previous forecasts had not taken into account the price recovery on the back of stronger crude oil prices.
The brokerage said: “We believe strong demand recovery for the automotive sector in China and supply constraint due to ongoing conversions to oil palm and the wintering season between February and April would contribute to the jump in rubber prices.Our assumptions are factoring in 29% lower prices in the second half of 2010 compared with the first half.”
One analyst with a local stockbroking firm said the recent automobile industry statistics unveiled that the pick-up in the auto sector in China and the United States had been strong.
The automobile industry is the single biggest user of latex, easily consuming about 70% of the world latex production.
While some might argue that the price upsurge could be short-term given the traditional low supply wintering season, however, many feel that the current price hike was a reflection of strong demand.
“Even with a possible price reduction down the line, natural rubber prices are unlikely to ease to the low levels of December 2008 and January 2009,” he added.
Founded in 1985 in Malaysia, EMP Group of Companies have associated companies in Malaysia, Australia Thailand and Hong Kong.
Please read our blog to learn about our projects undertaken and what we can offer to you.
TW Kang
Managing Director,
Engmepho Professional Enterprise Sdn.Bhd.
14A, Jalan Pandan Indah 4/8, Pandan Indah, 55100 Kuala Lumpur, Malaysia.