Thai govt rejects extra funds to buy rubber for now

BANGKOK, Aug 28 (Reuters) – The Thai cabinet has turned down a plan to spend another 15 billion baht ($480 million) on buying rubber to prop up prices but will monitor the situation to see if further intervention is necessary, the de p uty agriculture minister said on Tuesday.

“We still have 2 billion baht from the previous 15 billion baht budget left. We will spend what we have left first. Then an ad hoc rubber committee will consider what we should do next as the situation may change,” Nattawut Saikuar told reporters.

Nattawut, who had announced the plan to beef up the buying scheme on Aug. 21, was speaking after a cabinet meeting.

An intervention scheme launched in January has failed to raise unsmoked rubber sheet (USS3) to anywhere near the targeted price of 120 baht per kg and the government has bought only a fraction of the planned 200,000 tonnes.

USS3 was quoted at 82 baht per kg on Tuesday, while benchmark RSS3 smoked rubber sheet was at $2.95 per kg. That was way below the record high of $6.40 per kg hit in February 2011.

Demand for rubber has dropped because of the slowdown in the euro zone and other countries. Worries about defaults by Chinese buyers have added to the gloom.

In addition to its domestic intervention scheme, Thailand agreed with Indonesia and Malaysia on Aug. 16 to cut exports by a total 300,000 tonnes to support prices.

The three countries account for 70 percent of global natural rubber output.

On Monday, the Thai Rubber Association said the export ban in Thailand would take effect from October. The government would cut quotas for companies, leading to a drop in exports each month of around 10 percent, or 25,000 tonnes.

Traders in Indonesia and Malaysia said they had heard nothing from the authorities there. ($1 = 31.2350 Thai baht)

(Reporting by Pracha Hariraksapitak; Writing by Apornrath Phoonphongphiphat; Editing by Alan Raybould and Miral Fahmy)

Source: Reuters