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May 31, 2020

Local rubber price riding rough due to instable dollar exchange rate

Production of rubber latex sheets goes down as the temperature of the local weather increases.  Photo: htut htut (ye)
Production of rubber latex sheets goes down as the temperature of the local weather increases.  Photo: htut htut (ye)

The current instability of dollar exchange rate has led to a rough ride for local rubber price, said U Khaing Myint, secretary of Myanmar Rubber Planters and Producers Association.
“The prevailing local rubber price is not that different, compared to global rubber price. However, dollar exchange rate fluctuation in local currency market causes a rough price pattern for local rubber”, he said.
At present, a ton of RSS3 (ribbed smoked sheets) rubber is worth US$1,300 in global market, whereas local rubber fetches Ks850 per pound. When the US dollar exchange rate hit above Ks1,640 last week, the price of rubber reached a high of Ks890 per pound.
Rubber production was halted during the rainy season. It was resumed this month and the price turned to the high side. Nevertheless, production is still less, since the rainy season has not ended, said U Khaing Myint.
“Last rainy season witnessed the fall of rubber price to Ks700 per pound. The opening price in the early rubber tapping season is on the high side”, he maintained.
Rubber price is usually on high side when the rubber tapping season starts. Last year, rubber fetched above Ks900 in the opening season. This being so, this year’s price is lower than last year’s. Rubber trading is still slow. Last year, it fell to a low of Ks500 per pound, forcing some rubber farm owners to shut down their businesses without tapping latex, as they cannot cover labour wages. The prevailing price is pretty high, Daw Lin Lin Tun, rubber producer from Hlaingbwe Township said.
Rubber price hit the highest record in 2011 with Ks1,800 per pound and $6,000 per ton.
Rubber price can vary depending on dollar price, global crude oil price and global political climate. Currently, global rubber demand is moving slow, resulting from escalating trade war between the US and China. Therefore, largest rubber producers such as Thailand, Malaysia and Indonesia are reducing their production, with a falling demand on global market. Myanmar, being a low producer of rubber, will not be affected from this.
Seventy per cent of Myanmar’s rubber production goes to China market. It is also shipped to Singapore, Indonesia, Malaysia, Viet Nam, South Korea, India, Japan, etc. Myanmar’s rubber is primarily produced in Mon and Kayin states and Taninthayi, Bago and Yangon regions. There are 1.63 million acres of rubber plantations in Myanmar, of which over 700,000 acres can produce rubber latex. About 150,000 tons of rubber were exported in the 2017-2018 fiscal year.
As Myanmar’s rubber is substandard, there is a price gap of $400 per ton between global and local rubber prices. All stakeholders in the rubber supply chain are exerting concerted efforts to produce profitable quality rubber.
At present, Rubber Law is still being drafted. The government and rubber associations are endeavouring to set up a rubber central market after the Rubber Law comes into effect.

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