Rubber/TFEX and RAOT

Editorial staff

Thailand Futures Exchange Plc (TFEX) has entered into a memorandum of understanding (MoU) with the Rubber Authority of Thailand (RAOT) for collaboration to establish the standardized rubber reference prices.

These benchmarks will serve as reference trading transactions for both domestic and international players and facilitate the development of related products.

TFEX managing director Rinjai Chakornpipat said that the initiative is aimed to develop a recognized rubber reference prices for Thailand, which will benefit both the rubber and related industries.

"TFEX and RAOT aim for the reference prices to be widely accepted and used in trading transactions domestically and internationally. TFEX will calculate and publish the reference prices.

The methodology for established reference price will be published for the general public to ensure transparency of the benchmark. TFEX and RAOT also have a plan to consult with the industry to explore the development of rubber reference prices that comply with the European Union Deforestation-Free Regulation (EUDR). Besides, TFEX will further explore to utilize these reference prices for Rubber Futures product development," said Rinjai.

RAOT governor Nakorn Tangavirapat said that even though Thailand is the world's major rubber producer, the country had relied on international rubber market prices as reference for its export contracts.

Development of its domestic reference prices will help reflect the costs of Thai rubber farmers and local producers. To address this issue, RAOT, the central agency overseeing the entire rubber industry including domestic and export markets, has partnered with TFEX to develop the reference price calculation methodology for trading Thai rubber with aims to ensure transparency and adhere to international standards.

The established reference prices will be publicly published, enabling relevant stakeholders to use them as a basis for determining contract prices for rubber exports (FOB prices). This development is expected to enhance confidence among stakeholders in the rubber industry.

Under the collaboration, RAOT will gather and provide data on trading volumes, product information for various types of rubber, and other necessary information from RAOT’s central rubber markets in each province. TFEX will use such data to calculate reference prices. RAOT and TFEX will disseminate these reference prices.

"We firmly believe that this collaboration marks a significant step in establishing internationally accepted methodology to establish Thai rubber reference prices and will pave the way for Thailand to become a hub for the rubber product industry, ultimately benefiting rubber farmers and Thai rubber entrepreneurs by strengthening their livelihoods and ensuring career stability,” Mr Nakorn added.

The MoU signing ceremony was held on June 12, 2024. The rubber reference prices will be calculated and published twice daily as follows: the price for Ribbed Smoked Sheet Grade 3 (RSS3) will be released at 12:00 hrs. (planned to launch in July 2024), while the prices for concentrated latex and block rubber will be announced at 19:00 hrs. (planned to launch in September 2024).