Rubber producers say the price of raw rubber has dropped by about 50 percent since early August. Pic: Aung Tun Win

PLUNGING global commodity prices have cut into exporters’ profits and are also hurting growers and producers, industry sources said last week.

The price of export-grade rubber has declined 40 percent since the beginning of August, while rice has dipped 30pc, according to exporters.

Rubber, like most commodities, has been lower because global demand is expected to fall as a result of the financial crisis. Experts say the rubber price will remain low until car sales improve, which is unlikely in the short term given the current economic climate.

GDP growth in China is expected to drop to 7.5pc next year, while many Western economies, including the US, Japan and the euro zone countries, are expected to enter recession.

Rice shipments have also been affected by the financial crisis. Export-quality eimahta paddy is now trading at US$2400 per tonne, down 30pc on six months ago.

Exporters said last week that orders from Bangladesh and African countries – the main buyers of Myanmar rice – have dried up as a result of the toughest financial climate since the Great Depression.

Rubber export grades (RSS) 1, 3 and 5 have suffered the largest price declines, sources in Tanintharyi Division said last week.

After reaching a record high of US$3250 per tonne in July, RSS grade 1 rubber is now being traded at about $1800 per tonne, a drop of about 45pc.

Some local exporters are now stopping shipments completely, while others are continuing but with lower profit margins.

“The main reason some exporters are continuing to export with less profit is that we don’t want to pass the financial problems on to local rubber growers and distributors,” one exporter said.

But rubber growers and distributors in Mon State said the price of raw rubber, or latex, has dropped by 50pc since late July. Despite the lower price, growers are often unable to find buyers because most rubber producers are scaling back production.

It is the second blow to the industry this year after approximately 20,000 acres of rubber producing crop was destroyed by Cyclone Nargis in May.

In June, following the cyclone, the Myanmar Rubber Planters and Producers Association revised down its national production estimate for the 2008-2009 fiscal year to 70,000-75,000 tonnes, of which 50,000 was to be exported.

Exporters from Tanintharyi Division said they still expect to receive orders from Malaysia and China, the main importers of Myanmar rubber. The immediate prospects for rice exports are less clear.

“We still don’t know what we can do about the lower demand for rice from foreign countries. Hopefully in six months or so things will have settled down,” one exporter said.