KUALA LUMPUR—World natural rubber prices are falling despite a deficit in world supply, according to the May 2017 issue of Natural Rubber Trends & Statistics, the official publication of the Association of Natural Rubber Producing Countries.
World NR supply was nearly 600,000 metric tons in deficit from January to May 2017, ANRPC Secretary General Nguyen Ngoc Bich said in his message at the beginning of the May issue, dated June 13, 2017.
By the end of June, the ANRPC anticipates that deficit to grow to approximately 700,000 tons, Nguyen said.
Because of this, the association has revised its 2017 world supply figure downward from a month ago, to 12.756 million tons from April's 12.771 million tons, according to Nguyen. The downward path of prices is likely to discourage NR farmers from planting and tapping, he said.
"Physical prices of NR are increasingly dominated by sentiments in Shanghai and TOCOM (Tokyo Commodities Market) futures, which are vulnerable to fluctuations in currencies, crude oil prices and geopolitical developments," Nguyen wrote.
"These observations point to the increasing vulnerability of natural rubber prices to factors external to its demand and supply," he said.
The price of Standard Malaysian Rubber 20 (tire-grade NR) fell from $157.20 per 100 kilograms on May 23 to $138.80 per 100 kg on June 7, according to the ANRPC's May report.
Because of this, farmers are expected to reduce harvesting and delay the reopening of tapping after the wintering season is over, the report said.
Cambodia and India are still expected to have large increases in NR supply during 2017, according to the report. Cambodia's output should increase 35.3 percent, from 2016's 145,200 tons to 196,400 tons, and India's should grow 20.2 percent from 624,000 to 750,000 tons, it said.
These projected increases are largely due to the expected expansion of tapped trees in both countries during the year, the ANRPC said.
On the other hand, Indonesia's NR supply will grow only 0.2 percent, from 3.1 to 3.2 million tons. Thailand, despite an expected large increase in tapped trees, will see supply increases of a less-than-expected 5.1 percent, from 4.17 million tons to 4.38 million tons, the association said.
Major flooding in January and February hurt NR production, especially in Thailand.