KUALA LUMPUR, Malaysia — Natural rubber markets could rise — or at least sustain their current upswing — in the short term, due to factors such as tight supply, high demand and a COVID-19 recovery, according to the Association of Natural Rubber Producing Countries (ANRPC).
The ANRPC said the global production of NR is anticipated to be down 10.1% during December from December 2019.
A key contributor, the association said, is the spread of fungal leaf diseases in mature rubber trees occupying around 963,000 acres in Indonesia, 370,500 acres in Thailand, 47,000 in Malaysia and 49,400 in Sri Lanka.
This will lower the yield "considerably" for about two years.
In addition, the holdings that are unaffected by the fugal diseases are expected to be given tapping rest from the second half of January, coinciding with the annual wintering of trees.
Moreover, labor shortages are expected to continue to hurt supply, as cross-border travel restrictions prevent migrant tappers and plantation workers from returning to Thailand and Malaysia.
While the outlook for the supply of NR is lowered, the ANRPC expects the global consumption rates to increase by 4% year on year during December, contributing to higher prices.
The demand will be supported by positive market sentiment and global economic revival on the back of a breakthrough in the development of COVID-19 vaccines.
The ANRPC also noted that crude oil market is anticipated to stay "in favor of NR market," while the U.S. dollar is "unlikely to gain strength" in the short-term.
The association, however, warned that there might be potential weaknesses in the market, such as extreme weather in major rubber-producing countries and an ease in pent-up demand in major consuming countries such as India and China.
In addition, the development of COVID-19 vaccines is likely to dim the prospects of the NR latex market, the association added.