Association of Natural Rubber Producing Countries (ANRPC ) said rubber output in Malaysia, world’s third largest producer, was down 6 per cent from an earlier forecast, due to expansion in palm oil plantations.

In its latest report ANRPC however said there were no changes in output forecast for Thailand and Indonesia, the world’s No. 1 and 2 producers respectively though both countries have seen a slower growth in output in recent years due to bad weather.

In July, the ANRPC estimated Malaysia’s output at 1.26 million tones in 2008, barely changed from 1.20 million tones in 2007, according to Commodity Online.

“It is striking to note that production during the January to September 2008 works out to be 16 per cent lower than that in the same period in 2006,” said the ANRPC, whose members account for 95 per cent of global output of natural rubber.

“This sharp decline in output could be attributed to the substantial shrinkage in mature area by 173,000 hectares (388,731 acres) in just one year due to the expansion of palm oil plantations,” it said.

Output from Malaysia, the world’s second-largest palm oil producer, has been rising in recent years due to an increase in demand for cooking oil and biofuel. Dealers said many rubber and cocoa plantations have been replaced with palm oil.

“In Malaysia, the total rubber area is anticipated to come down further by 268,000 hectares by 2020.”

Thailand’s rubber output was seen steady at 3.08 million tones in 2008 after falling more than 2 per cent last year, when heavy rains disrupted tapping.

The ANRPC estimated production in Indonesia to rise to 2.86 million tones this year from 2.76 million in 2007, but the country’s production growth had declined recently.

The world’s top three rubber producing countries have agreed to jointly cut output by 215,000 tones in 2009 in a bid to shore up prices hit by dwindling demand and growing fears of a global recession.