6 October 1999
Volatility as rubber agreement ends

THE end of the international rubber agreement is expected to translate into increased price volatility, reports the Financial Times.

The International Natural Rubber Organisation (Inro) begins winding down next week.

Its demise became inevitable after the desertion of Thailand and Malaysia, the largest and third largest rubber producers.

They held back contributions to the pacts funds, accusing it of failing to support prices effectively.

One immediate concern is the 140,000 tonnes – or 2% of production – in Inros buffer stock.

A more complex concern is Thailand and Malaysias plan to support their domestic rubber growers by buying excess stocks.

Together the two countries produce about half of the worlds natural rubber.

A sell-off by Inro could depress prices. It is thought unlikely that Thailand and Malaysia would be able to sustain a long-term buying operation.

There is still some speculation that Inro might be resurrected.