SRI LANKA - GOOD NEWS FOR RUBBER PLANTATION COMPANIES

                                                                                                                  See report on Plantations source- Bloomberg / Bangkok January 27, 2010,

Global natural rubber supplies are tight and the outlook is bullish on favorable fundamentals, the Association of Natural Rubber Producing Countries said.

“Exporting countries are oriented towards ensuring the best price,” said Djoko Said Damardjati, the association’s secretary general, in a newsletter. "That will improve farm income and export earnings," he said. No producer nation “holds any buffer stock,” he said.

Prices doubled in 2009, the best performance since at least 1976, driven by optimism that demand was increasing as the world recovered from recession and as producers curbed supplies. The association includes Cambodia, China, India, Indonesia, Malaysia, Papua New Guinea, Singapore, Sri Lanka, Thailand and Vietnam. Total output represents about 94 per cent of global supply.

“The statement is optimistic that prices could move up further,” said Umaporn Thepnuan, marketing official at Future Agri Trade Co. in Bangkok. Futures in Tokyo may climb to 350 yen a kg ($3,891 a tonne) should they close above 303.8 yen, the highest end-session level since September 2008, she said, using price history as a guide.

Thailand, Indonesia and Malaysia, the three biggest growers, view the current price as appropriate and agreed to take steps to counter any negative trends, according to a joint statement after a meeting last week in Kuala Lumpur.

The nations put on hold plans to curb exports as the economic recovery boosted prices and demand, the International Rubber Consortium, which represents growers and exporters, said October 27. Supply was cut after prices fell to 99.8 yen a kg ($1,103 a tonne) in December 2008, the lowest level since August 2002. The price has almost tripled since then to 284.6 yen a kg.

The industry is “passing through a situation of tight supply caused by a progressive decline in production and a marked rebound in demand,” Djoko said in the newsletter.

The association said it raised its prediction for output this year in Indonesia, the second-largest producer, to 2.77 million tonnes from 2.68 million tonnes. India’s production may total 853,000 tonnes, up from the previous estimate of 848,000 tonnes, it said.

Vietnam may produce 770,000 tonnes, up from 680,000 tonnes, and exports will probably be 750,000 tonnes, it said, without giving estimates for other countries.