RSS
Twitter
Linked In
News In
Features
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Opinion: appetite for rubber opens up new frontier

Twitter Linkedin

The chart below reveals much about the economic impact of Chinese growth on the global economy in the final quarter of the 20th century and the opening decades of this century.

The picture would look similar for any of the big commodities – palm oil for example shows a very similar pattern. China and the US are now the world's joint leading consumers of natural rubber, consuming about 18% each of global production.

In the period 1998-2005, Chinese consumption of natural rubber increased by 12% a year. In 2010 alone, China produced 18.3m cars for a rise of over 32%, driving the country's demand for natural rubber.

Challenges to productivity

The phenomenon of Asian growth in the first decade of the 21st century, in China and India particularly, prompted a dramatic increase in new plantings.

And there is gathering evidence for a growing appetite for rubber-producing assets, especially with the threats posed to productivity by labour shortages in Asia, thanks to urban drift, and by climate change.

Some industry experts believe that climate change has already reduced Thailand's productivity by more than 5%. Thailand is the world's leading producer country, accounting for some 34% of global output.

'Very encouraging scenario'

Malaysian plantations giant Sime Darby has recently announced a first investment in Indonesian rubber plantation assets.

MRF of Chennai, one of India's largest tyre manufacturers, has announced that it would like to acquire rubber plantations outside India, and a number of the leading commodities trading houses are believed to be developing strategies for securing access to production assets extending from Asia to West Africa.

"The global scenario for natural rubber is very encouraging with projections of increasing demand till 2020 and possibly beyond," according to Dr S Sivakumaran, executive director, research and development at Malaysian-based agricultural consultancy Greenyield Berhad.

The Association of Natural Rubber Producing Countries put global output of natural rubber at 9.47m tonnes in 2010 and in 2011 was expecting growth of 6.2%, a tad behind consumption.

New frontier

Attention is now turning to West Africa which like East Asia, has a highly suitable climate for rubber cultivation and a large pool of agricultural workers – of which Asia no longer has in abundance.

Liberia and Cote d'Ivoire are both potentially important producers, but today only account for around 2-4% of global output.

Liberia has some 10m hectares of land available for agriculture of which oil palm developments are now expected to use at least 1m hectares, but rubber plantations account for only 200,000 hectares today, something the country's government wants to see changed.

The region is now attracting considerable interest from international rubber-focused businesses seeking to build their portfolios of rubber producing assets.

Doug Hawkins, at London-based broker Hardman & Co, is an African agriculture sector specialist who has built a register of rubber assets across West Africa

SourceL IMF

By Doug Hawkins

Twitter Linkedin
Related Stories

Morning markets: Grains stage a recovery. Will it last?

Corn, soybean and wheat futures start Wednesday making headway which has been difficult to come by of late. Cotton gains too

Evening markets: ags overlook crumbs of comfort in Wasde to set fresh historic low

The Bcom ag commodity subindex ends at a fresh record low, as US export fears overtake upbeat interpretations of corn, cotton estimate revisions

Abares lifts hopes for sugar futures, but cuts its cotton price forecast

A downgrade to Australia curtails an upgrade in world sugar output expectations. But for cotton, Abares ditches ideas of a global production deficit

Evening markets: Ags poop party lifting other commodities, shares

Wheat futures set another contract low, while arabica coffee hits its weakest close but one in 19 months, despite buying in other asset classes
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069