The Thai government said on Monday it would not intervene in the domestic rubber market at this point as prices had rebounded to a level farmers were satisfied with. "Prices fell briefly due to a short-term panic after Japan's earthquake, which raised concern on falling demand, and now prices have recovered so we don't need any measures to push prices up," said Deputy Agriculture Minister Supachai Phosu.
The price of benchmark Thai unsmoked rubber sheet (USS3) almost halved from a record high of 180 baht per kg to 95 baht last week but had rebounded to 160 baht on Monday after the government indicated it would not tolerate unsmoked rubber below 120 baht per kg.
That equates to around $5.0 per kg for the export price of benchmark RSS3, traders said. The benchmark rubber contract on the Tokyo Commodity Exchange (TOCOM) for August delivery, which sets the global trend, jumped 3 percent to settle at 408.6 yen ($5.07) per kg on Friday due to supply concerns after the Thai government said it had asked exporters to halt exports to prop up prices.
Japanese financial markets were closed for a public holiday on Monday. Trading will resume on Tuesday and traders said TOCOM could fall again if the market was disappointed at the lack of action by the Thai government. "Prices could fall again on Tuesday as fears about tight supply due to Thai intervention have eased," said a trader in Thailand's Hat Yai rubber centre.
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