Commodities

China's top rubber producer suspends tapping at some plantations amid drought

China's biggest natural rubber producer on Thursday said it had suspended tapping for the commodity at some plantations from last weekend due to drought and soaring temperatures in the nation's main growing area.

BEIJING, May 23 (Reuters) - China's biggest natural rubber producer on Thursday said it had suspended tapping for the commodity at some plantations from last weekend due to drought and soaring temperatures in the nation's main growing area.

Yunnan Natural Rubber Industry Group Co Ltd on Sunday stopped tapping at some of its plantations, mostly located in the southwestern province of Yunnan, according to an official at the company.

He did not say which plantations or how much production had been affected, although he added that rainfall in the last day could help alleviate the situation.

Most areas in Yunnan province have faced severe drought in the past month, with temperatures in some parts reaching 40 Celsius (104F).

China is one of the world's top natural rubber producers, churning out about 800,000 tonnes of the material every year. Over half that comes from Yunnan province.

Shanghai rubber futures SNRv1 rallied as much as 5 percent from May 15 amid concerns over lower supplies from Yunnan, before easing on Wednesday.

"The effect (on markets) seems to be more psychological," said Martin Hampson, vice president of trading at Olam's rubber division.

"At this time of year, production is relatively small anyway as they're coming out of the wintering period."

He added that dry weather in other major producers such as Thailand and Vietnam had also tightened supply.

However, some areas of Yunnan saw heavy rain on Wednesday, according to China's weather agency. More rain is forecast for the coming days.

(Reporting by Hallie Gu and Dominique Patton; Editing by Joseph Radford)

((Hallie.Gu@thomsonreuters.com; +86 10 6627 1250; Reuters Messaging: hallie.gu.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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