Sri Lanka rubber producers urged to cut supply to prop up prices

Oct 28, 2008 (LBO) – Sri Lankan authorities are advising rubber cultivators to reduce supply in an effort to prevent prices which have fallen off record highs, from slumping further.

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Rubber Research Institute director Asoka Nugawala said a short-term solution to the fall in prices at the Colombo auctions would be for cultivators to tap their rubber trees less often and reduce supply.

Prices have fallen for a combination of reasons, he said.

The slowing down of the global economy has reduced the buying power of consuming countries and pushed down demand for natural rubber.

Also, the fall in the price of crude oil has reduced the price of synthetic rubber, an alternative to natural rubber.

And the uncertainty in the markets was making buyers reluctant to buy.

“Buyers are waiting for prices to fall further,” Nugawala said. “That’s the main reason for the price to fall in recent weeks.”

He said they were asking cultivators to reduce supply by not tapping the rubber trees on certain days and to resume tapping when prices stabilize.