Unexpected silver lining for coffee, rubber firms

The natural rubber price has increased 65 per cent compared to last year according to Vietnam

Rubber Association. Vietnam shipped 603,000 tonnes of rubber, earning $1.67 billion, in the first 10 months of this year, a year-on-year increase of 7.7 per cent in volume and 92.5 per cent in value

Since early 2010 the average export price has been about $2,770 per tonne, a year-on-year increase of 84 per cent.

The increased rubber prices came from high demand as the global economy recovers and the demand for natural rubber for the automobile industry increases. Meanwhile, the world’s major rubber producers such as Thailand, Indonesia and Malaysia have experienced inclement weather.

Natural rubber imports by China are expected to surge 42 per cent in the fourth quarter, bringing total purchases this year to 1.68 million tonnes, compared with 1.59 million tonnes last year.

Thailand’s floods have spread to 10 southern provinces, where the largest rubber producer and exporter in the country. So “Rubber output in Thailand may decline 4.1 per cent in the fourth quarter to 9,300,000 tonnes,” Luckchai Kittipol, president of the Thai Rubber Association, said.

Output from India, the fourth-biggest producer, declined 7.6 per cent to 82,000 tonnes in October due to excess rain according to the state-run Rubber Board.

In the same trend, the coffee price is climbing due to concerns over supply shortage.

The price of coffee has risen to a record  VND31,500 per kilogramme in the past two years.

According to the Vietnam Cacao and Coffee Association (Vicofa), the domestic price of coffee has risen because of a shortage on the world market and international businesses are rushing to purchase coffee.

“Rains have delayed the crop’s harvesting for about a week already, causing beans to hit the market later than in previous years,” said Bui Hung Manh, head of the business department at Tay Nguyen Coffee Investment.

The bad weather in South America is threatening crops.  Prices have jumped on concerns that unfavourable weather in Latin America and India.

“Global coffee prices will be good this year, so we expect to earn $1.8 billion to $2 billion in export turnover,” said An at Vicofa, a non-governmental organisation that represents producers and traders and helps to shape government policy.

Tran Ngoc Thuan, the general manager of Vietnam Rubber Group also said that Vietnam’s rubber exports was estimated to reach $1.8-2 billion in 2010 as export prices continue rising to over $4,000 per tonne.