KUALA LUMPUR - The world's top rubber producers, Thailand, Indonesia and Malaysia, are targeting to set up a regional rubber market in the next 18 months that will serve as a platform for better rubber price recovery, as well as an effective hedging function for producers, consumers and market players.
Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said the framework for the proposed rubber market is completed.
"For a start, the regional rubber market will serve as an electronic platform, merging the rubber exchanges of the three countries where it will do physical trading for one month.
"Subsequently, it will go into futures contract trading," he told StarBiz on the sidelines of the International Tripartite Rubber Council (ITRC) Ministerial Committee Meeting 2014 here yesterday.
"We are currently working towards establishing the market, including a report on its viability by the LMC International Group. The report is set to be tabled to the Ministerial Committee by the end of this year," added Uggah.
The ITRC is represented by Thailand, Indonesia and Malaysia, which, in turn, account for 67 per cent of the total global natural rubber (NR) production and 79 per cent of global NR export.
Meanwhile, at a press conference, Uggah said the ministerial meeting had discussed the latest developments in the rubber market, particularly, its supply fundamentals, current stock levels and the recent rubber price trend.
The ITRC Ministerial Committee Meeting, which was chaired by Uggah, was attended by Indonesia's Trade Minister Rachmat Gobel, Thailand's Agriculture and Cooperatives Minister Petipong Pungbun Na Ayudhya and other rubber officials from the three countries.
"We are optimistic given the improving global NR supply and demand situation in the fourth quarter of this year, arising from the reduction in supply and increasing demand due to the substitution of synthetic rubber."
He pointed out that the three countries are committed to implementing measures to improve and strengthen rubber prices for the benefit of the producers and smallholders.
The measures will include the ITRC countries ensuring the allowable planted area under the supply management scheme (SMS) for the period 2015-2020 for a healthy balance in the NR supply and demand, a review of the SMS by ITRC, as well as the NR export management by the three major producers to ensure no excess supply in the global market.