* Global prices have dropped more than 25 pct this year
* Thai govt wants to sell to limit losses on stockpiles
* Farmers plan to stage protests against sale
(Adds latest market prices, quotes from traders, detail)
By Apornrath Phoonphongphiphat and Lewa Pardomuan
BANGKOK/SINGAPORE May 7 Thailand pledged on
Wednesday to go ahead with a plan to sell 200,000 tonnes of
rubber from state stockpiles, shrugging off strong opposition
from farmers and helping drive down global prices to near the
lowest in more than four years.
Thailand, the world's largest rubber producer, had intended
to sell rubber last month it had bought from farmers, but no
sales were made amid threats from farmers to stage protests.
The efforts to prop up the market have proved expensive for
Thailand and so far made little impression on weak prices.
Thailand spent 22 billion baht ($680 million) buying rubber from
farmers from October 2012 to May 2013.
"The rubber stocks have been kept for such a long time and
they have deteriorated," agriculture minister Yukol Limlaemthong
"The longer we keep them, the bigger the losses will be.
There's no point in holding them further. We welcome all buyers.
Exporters, trading houses and tyre makers can offer to buy from
us," he said.
A sale of 200,000 tonnes could be worth around $390 million
at current prices.
His comments were made before a Thai court found Prime
Minister Yingluck Shinawatra guilty on Wednesday of violating
the constitution and said she had to step down, although Yukol
is among ministers not implicated in the case so can remain in
Farmers say it is the wrong time to release rubber
inventory, fearing the sale will add to the downward pressure on
prices, which have failed to react to the tight supply during
the dry season in Southeast Asia.
Benchmark Tokyo rubber futures sank almost 5 percent on
Wednesday as trading resumed after a two-day holiday. The most
active October contract hit a low of 197.0 yen a kg, a
fraction above a 4-1/2 year low of 196.7 yen struck in late
Tokyo futures have fallen more than a quarter this year on
fears about falling demand from top consumer China.
Thai rubber farmers said they will gather in Bangkok on
Wednesday to protest against the sale plan.
Thailand is expected to produce 4 million tonnes of rubber
in 2014, of which around 80 percent is for export, while its
end-2013 stocks were estimated at about half-a-million tonnes.
The rubber market has been suffering from soft demand from
top consumer China. Growth in the world's second-largest economy
is likely to slow to 7.4 percent in 2014 from 7.7 percent last
year due to the government's drive to curb credit risk and
excessive factory capacity, the OECD said on Tuesday.
On Singapore's SICOM exchange, the TSR20 contract -
which covers Thai, Indonesian and Malaysian grades - was stuck
near its weakest since mid-2009.
As tyre grade prices languish near 5-year low, some Thai
dealers have refused to sell rubber, while in rival producers
Malaysia and Indonesia, some tappers have stopped tapping,
looking for other jobs.
"All the bad things seem to happen at the same time," said
Edy Irwansyah, executive secretary of the North Sumatran branch
of the Indonesian Rubber Association, which groups exporters in
the world's second-largest producer.
"This is going to further weigh on prices. I would think
that Thailand should find ways to boost domestic consumption
The tyre-making industry makes up about 60 percent of
global rubber consumption. Rubber is also used to make gloves,
condoms and products in transport, construction, health and
"I expect to see further erosion of the market," said a
dealer in Singapore. "It is quite frightening to understand that
these people run a country ... in view of the fact that they
bought the rubber to support the market."
There were no signs the International Rubber Consortium
(IRCo), which represents rubber producers in Thailand, Indonesia
and Malaysia, will intervene to support price.
($1 = 32.3650 Thai Baht)
(Editing by Ed Davies)