Thai Rubber Output May Reach Record as Plantings Rise

By Rattaphol Onsanit

Sept. 11 (Bloomberg) -- Thailand, the world's biggest rubber producer and exporter, may boost output more than 6 percent to a record next year as recent price increases lure planters outside the main growing region in the south.

Production may total as much as 3.3 million tons, compared with an estimated 3.1 million this year, Thai Rubber Association President Luckchai Kittipol said today.

``More supply from the northeast is coming in,'' Luckchai said in a telephone interview today in Bangkok. ``Growers are happy about the prices.''

Expansion by Toyota Motor Corp. and other global carmakers in Thailand is prompting farmers to grow rubber in the northeast, which has vast tracts of fallow land. Increased output may weigh on natural rubber prices that have dipped 16 percent from a 28- year high on June 30 in Tokyo, the global benchmark.

``Higher production from Thailand is, of course, negative news for prices,'' Newedge Japan Inc. trader Arataki Masami said by phone from Tokyo.

Worldwide car sales are weakening, eroding demand for rubber. Rubber for February delivery on the Tokyo Commodity Exchange fell 0.4 percent to 300.7 yen a kilogram ($2,800 a ton) as of 5:20 p.m. after earlier falling to a three-week low.

Still, ``the price is unnecessarily high,'' said Luckchai, who is also president of Thai Hua Rubber Pcl, the nation's third- largest exporter. ``It should come down to between 270-280 yen.''

Thailand produced 3.06 million tons of rubber last year, of which 2.7 million was exported, according to the farm ministry's Rubber Research Institute.

China's passenger-car sales fell in August for the first time in more than three years as the Beijing Olympics and a slumping stock market prompted a delay in purchases, the China Association of Automobile Manufacturers said on Sept. 9.

Passenger car sales in India fell for the second consecutive month in August as higher loan rates cut demand for hatchbacks made by Maruti Suzuki India Ltd. and Tata Motors Ltd., the Society of Indian Automobile Manufacturers said today.

To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net