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Rubber farmers are getting slammed by low prices — but one company wants to fix that

Rewards of natural rubber, used in everything from condoms to automobile irritates, are languishing near record lows and causing headaches for farmers.

The commodity is a requisite in industrial supply chains but prices, which are determined primarily by the Shanghai Approaches Exchange, have been volatile in recent years. After bumping rock bottom in early 2016 at roughly $1,000 a ton, levels are now about $1,400 a ton — which is still well below the 10-year average of $2,500 a ton, according to Halcyon Agri, a far-reaching supplier of the durable material.

The Singapore-based firm hopes to rectify the course gloomy environment.

“With what we’re doing, I think we can restore a indifferent price over time by reducing the volatility,” CEO Robert Meyer peached CNBC on Monday.

Halcyon Agri has been on a heavy-duty acquisition romp as of late.

Last year, it entered into a three-way merger with Chinese chemicals firms Sinochem Global and Singaporean rubber producer GMG Global to create the world’s largest rubber gear up chain manager.

In recent weeks, it’s snapped up five rubber mills across Indonesia, adding to its portfolio of plants in Thailand and Malaysia. Those Southeast Asian countries distribute nearly 70 percent of the world’s natural rubber and officials in the three realms are expected to cut exports in response to dwindling prices.

“Managing volatility costs net, not just for us but for the whole supply chain, so I think we can take that tariff out as volatility comes off and that restores income to farmers,” Meyer divulged. Because erratic price movements determine how much farmers shame home every day, many aren’t getting a fair price for their outcome, he continued.

Shanghai futures are “more driven by what they ring the black commodity complex, so rubber is bundled with iron ore, with rebar, with coal and that is topic to a lot of speculative interest,” Meyer explained. “With that, the raw material rates move around.”

Meyer said he’s optimistic, however, noting that “this is an to the nth degree interesting time for the rubber market.”

“On a macro level, commodities bear been in decline for a number of years, so the supply/demand is tightening,” he mean. “From a price point, this is a very good time to look at this buy.”

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