Latex futures will start trading today.

"The product will create a benchmark as the latex price is now based on the Malaysian price and we will have hedging instruments against risk," Worathep Wongsasithikul, chairman of Thai Latex Association, told reporters yesterday.

He predicted that latex prices would not exceed US$1,200 (Bt46,600) per tonne this year, compared with recent peaks of $1,400-$1,500 per tonne.

"Although the forecast price seems to be relatively high, it will be lower than last year," he said.

Thailand is the world's largest natural rubber latex producer and exporter with a market share of 50-60 per cent of the world's production of 1.6 million tonnes per annum.

Latex will be the third product in the rubber series traded in the futures market.

Napaporn Kurupasutachai, the Afet's president, estimated that 100 contracts of latex products would be traded in the market over the next three months.

Latex production has rapidly increased to 500,000 tonnes in 2004, up 72.4 per cent from 290,000 tonnes in 2000. Growth was driven by expansion in downstream industries such as rubber gloves, catheters, condoms and toys, he said.

Each latex trading contract is for 5,000 kilograms and each delivery batch is 20,000 kilograms.

The Afet will initially launch futures contracts for July to October 2006 deliveries.

Napaporn forecasted that the Afet's daily volume would reach 3,000 contracts over the next three years.

"I believe the daily trading volume will meet the target because the number of contracts traded has increased," she said.

The daily volume was 256 contracts between May and December 2004, with 385 contracts for the whole year 2005 and 406 contracts between January and March 15 of this year.

Siriporn Chanjindamanee

The Nation