Takeaways

• Severe floods in southern Thailand could slash rubber output by up to 90,000 tons, causing losses of $140 million.
• More than 4.1 million rai of farmland and over 160,000 farmers have been affected, raising major concerns for global rubber supply.
• Economic losses could reach 25 billion baht, with factories, exports, and local communities facing growing disruptions.

Severe Thailand floods have devastated the country's southern region, threatening to cut rubber output in the world’s largest producer by as much as 90,000 metric tons, the Rubber Authority of Thailand said on Thursday. The potential loss, valued at around 4.5 billion baht ($140 million), signals mounting challenges for the global rubber industry, which is already grappling with supply tightness.

According to Perk Lertwangpong, chairman of the Rubber Authority of Thailand, floodwaters have inundated around 4.1 million rai (656,000 hectares) of rubber-planting areas. More than 160,000 farmers are affected, and about 40,000 tons of rubber production have already been lost across nine provinces. “By the time the floodwaters recede and production can resume, the loss could potentially double,” Perk warned, noting that “some areas have been hit very hard.”

The supply concerns immediately pushed up Japanese rubber futures on Thursday, reflecting growing market uncertainty. Thailand is not only the world's top rubber producer but also the largest exporter, making disruptions particularly significant for the global rubber supply.

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Southern Thailand, which accounted for more than half of the country’s total rubber cultivation area in 2023, is among the worst hit. Songkhla province, in particular, has suffered record rainfall. More than 630 mm of rain has fallen around Hat Yai since last Wednesday, surpassing a previous peak of 428 mm recorded in 2010, data from the country’s Geo-Informatics and Space Technology Development Agency showed.

The humanitarian toll is rising as well. At least 33 people have died in Thailand and two in neighbouring Malaysia. Tens of thousands of residents have taken shelter in evacuation centres, with some communities cut off for days by floodwaters reaching up to two metres high.

Businesses are also feeling the strain. Integrated rubber producer Sri Trang Agro-Industry confirmed that some manufacturing facilities in the flooded areas have been affected. Its subsidiary, Sri Trang Gloves, a major global supplier of rubber gloves, has suspended production at impacted sites due to staff being unable to travel and water entering operational zones. These disruptions add more pressure to an already stressed supply chain.

Economists warn that the economic impact could go well beyond the immediate loss of rubber output. Burin Adulwattana, managing director of Kasikorn Research Center, estimated total economic damage at 25 billion baht ($776 million) so far. If factories remain shut and money stops circulating in local communities, the losses could escalate further.

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Last year, flooding in southern Thailand and Malaysia caused Thai rubber production to fall by 3% to 4.99 million tons. With export volumes reaching 3.86 million tons, the latest events raise concerns about continued volatility in the coming season.

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Source: Reuters