Thailand opened its first commodity futures exchange on Friday with trading in rubber, allowing brokers and producers to hedge risk better and pave the way for trading in more commodities.
The Agricultural Futures Exchange of Thailand started trading in natural rubber ribbed smoked sheets number 3, or RSS3, at 10.30 a.m. (0330 GMT) and closed at noon (0530 GMT)
Three contracts for deliveries in September, October and November were offered for trade initially. Thirty-one September contracts were traded and the price ended at 54.80 baht while 13 November contracts were traded and closed at 54.70 baht.
No October contracts were traded. Exchange President Punk Vejanurug declined to comment on expected volumes but said he was optimistic business would pick up in the coming months.
"Our producers will be able to reduce their risks. I am hopeful volumes will rise in the future," Punk told Reuters. Despite thin trade on the first day, brokers said they were optimistic about the market and expected the volume to rise to several hundred contracts a day in the near future.
"I think the market will go well since we are the top rubber producer and exporter. Many buyers want to buy our rubber, but at the beginning they will wait and see how it goes," said Siphoned Wongtra-ngan, chairman of JSP. Futures Co Ltd.
Another broker said the rubber price on Thailand's commodity futures market was lower than Tokyo's TOCOM market, so the Thai market was already competitive. "The rubber price in Thai commodity market is lower than in TOCOM market by at least three baht due to freight costs and we have plenty of rubber to sell.
I think many players will come to join us," said Choosiest Ophaswongse, executive director of Agrowealth Co, Ltd.
Thailand is the world's biggest producer and exporter of rubber, producing around 2.4 million tonnes of natural rubber a year, most of it for export.
Key buyers include Japan, China and the United States. Exchange officials said trading in Thai five-percent broken white rice grade would start later this year, followed by tiger prawns and tapioca.
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