Some rubber traders renege on contracts

Luckchai Kittipol said some producers had been damaged by a trader defaulting because the rubber price had fallen sharply.

"The problem has created losses for the industry, as there is nothing to guarantee against the purchasing contracts being reneged on by traders," he said.

This is because rubber traders normally make purchase orders by spoken agreement, with no written contract.

The price of rubber fell to Bt48 per kilo in the middle of last month, but has since rebounded to Bt60.

To solve the problem of contract defaults, Chaipat Sahasakul, secretarygeneral of the Agricultural Futures Trading Commission, suggested rubber traders join the futures market as all traders on the exchange must have deposit a guarantee of 5 per cent of the contract price.

He said that if any trader risked not fulfilling a contract, the market would ask for an additional guarantee in order to assure payment to the other party.

Meanwhile, rice traders said yesterday that the Commerce Ministry's rice bidding could create a loophole for corruption, as consideration of the bids results is likely to be delayed for Commerce Minister Chaiya Sasomsap's attention.

The ministry opened bidding for 3.1 million tonnes of rice yesterday, with many traders participating in the auction. However, the ministry did not immediately open all prices offered, due to a change in its regulations.

Thirtysix rice traders joined the bidding. Of these, 15 bid for 5 to 25percent white rice for export, and 21 bid for jasmine rice for export or domestic sale.

The Kingdom's five largest rice exporters - Capital Rice, Asia Golden Rice, Ponglarb, Chaiyaporn Rice and Thai Hua - joined the bidding. Newly established Siam Indiga, which is known to have a close relationship with President Agri Trading, once the country's biggest rice exporter, also took part.

However, the ministry has not yet opened the prices offered, saying that it must wait for Chaiya and the appropriate subcommittee to consider the bids.

An industry source said this could lead to corruption, as the ministry should open the bids to the public within a day in order to prevent underhand practices.

"We cannot know whether the official consideration is fair to all bidders if the government does not open the bids for all parties to acknowledge," said the source.