Thailand floods slash rubber output by up to 90,000 tons, driving global supply concerns

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Severe floods in Thailand’s southern region are expected to slash rubber production in the world’s largest producer by up to 90,000 metric tons, a loss valued at 4.5 billion baht ($140 million), the national rubber authority announced on Thursday.Flooding has severely impacted Thailand’s rubber industry, the world’s largest producer and exporter. Floodwaters have covered 4.1 million rai (656,000 hectares) of rubber planting areas, affecting over 160,000 farmers, according to Perk Lertwangpong, chairman of the Rubber Authority of Thailand, who was quoted in a Reuters report.Perk stated that approximately 40,000 tons of rubber production have been lost across nine provinces.He warned that the loss could potentially double, reaching as high as 90,000 tons, by the time the floodwaters recede and production is able to resume.Some areas have been hit very hard.Global supply concerns and market reactionSupply concerns pushed up Japanese rubber futures on Thursday, reflecting growing anxieties over global supply chain stability and production output, particularly from key Southeast Asian producers. The commodity’s price surge on the Osaka Exchange was a direct reaction to potential or actual disruptions in the natural rubber supply.The situation is particularly sensitive in Thailand, which is a global leader in natural rubber production. According to a detailed report from Krungsri Research, the backbone of Thailand’s rubber industry is heavily concentrated in its southern region.In 2023, this area accounted for over half of the country’s total rubber cultivation, which spans an immense 24 million rai (approximately 9.5 million acres). The research highlighted that the province of Songkhla was among the hardest hit by recent issues—often citing factors like severe weather events, disease outbreaks, or labor shortages—which directly threaten to curtail output and, consequently, tighten global supply. This geographic concentration of production means that localised disruptions in the south can have an immediate and outsized impact on international rubber markets, like the one witnessed in Japan.Wider economic costsBurin Adulwattana, managing director of Kasikorn Research Center, estimated the current overall economic impact at approximately 25 billion baht ($776 million). He cautioned that this figure could increase significantly if factories cease operations and m...

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