Indonesia’s natural-rubber production may decline 3.2 percent this year as heavy rain reduced tapping, reversing a previous forecast for a gain in output, an industry group said.
Output may fall to 3 million tons from 3.1 million tons last year, according to Asril Sutan Amir, chairman of the Rubber Association of Indonesia (Gapkindo). That compares with the group’s estimate last month for a 6.5 percent gain to 3.3 million tons.
Falling supplies from Indonesia, the largest producer after Thailand, may help extend a 21 percent rally in the price of natural rubber this year on expectations demand from the automotive industry will increase.
“I’ve been traveling to plantations in the main producing areas in Sumatra and Kalimantan and there’s still heavy rain there,” Asril said. “We’re in the seasonally low production period, and output will be lower if the rain persists until the second quarter.”
Exports may decline to about 2.45 million tons from 2.6 million tons, he said. He forecast rubber price to stay at a range of $3.70 to $4 per kilogram until the end of the second quarter.
Rubber futures for July delivery rose 1.3 percent to 318.1 yen ($4) a kilogram on the Tokyo Commodity Exchange on Friday.
Gapkindo is opposing a plan by the Industry Ministry to impose a tax on rubber exports, said Daud Husni Bastari, a member of the advisory board at the group.
“There’s no urgency to impose it,” he said. “A tax is needed if there’s a supply shortage to domestic buyers, but there’s no such issue at the moment. An export tax will only hurt farmers as processors may cut the purchasing price.”
The Industry Ministry reportedly is studying a tax on natural-rubber exports this year to secure domestic supplies.