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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.

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

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

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

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

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"

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.

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