Thailand to set benchmark price for rubber

Thailand, the world's largest producer of rubber, will establish an internal reference price of raw materials to minimize the effects of volatility in international futures market.
The committee created by the government will work on a methodology for setting prices, to be used as a reference point in the nation, said Apichart Jongskul, head of the Office of Agricultural Economics. Apichart is also secretary of the committee.
Thailand, Malaysia and Indonesia, the three major producers, last week a tentative agreement on $ 4 per kg at a minimum price after rubber futures fell to 37% from a record 535.7 yen on February 18. Worsening unrest in West Asia and the slowdown in the growth of car sales in China, the biggest buyer, raised concerns demand may decrease. The worst-ever earthquake in Japan also intensified the losses. "Additional studies will determine the price reflecting the demand and supply, and be less influenced by movement in the futures market," said Apichart.
The level of $ 4 is the minimum to which farmers can make a profit if production costs and inflation are included, Yium Tavarolit, the quality of executive director of the International Rubber Consortium, said by telephone Tuesday. Rubber futures in Tokyo rose by 26% after touching a four-month low of 335 yen per kg on March 15 after Thailand, Indonesia and Malaysia agreed in principle to delay exports if the price fell. The contract for August delivery rose to 5.1% at 429.6 yen per kg.