Government-run auctions at the Surat Thani central market have come to a halt this week, according to according the Research Institute of Thailand. Surat Thani province, known to tourists mainly for its eponymous capital--a rest stop on the way from Bangkok to Ko Samui and Koh Pha Ngan--is one of Thailand's top rubber-producing regions.

 

If prolonged, the supply slowdown could lead to shipping delays in the world's largest rubber-exporting country. Yet despite the disruption of deliveries, the benchmark rubber price on the Tokyo Commodity Exchange has been relatively steady over the past week after having fallen by more than 7% in the first week of 2014 on oversupply concerns.

 

Port stocks in China and Japan, two of the world's largest consumers of the tire-making commodity, are high, overshadowing any bullish impact that news out of Thailand might have, said Kaname Gokon, deputy manager of research at Tokyo-based brokerage Okato Shoji.

 

According to Thai government data, an estimated 1.2 million households in the country have at least one family member who works on a rubber plantation. Most production takes place in the south, where the opposition Democrat Party has its support base.

 

Rubber auctions however, however are still ongoing at the country's other two main central markets, at Hat Yai and Nakhon Si Thammarat.

 

The central-market auctions provide a window on rubber traffic in the country in the absence of broader data on how much raw material is bought and sold. Most deals are done privately.

 

Rubber sold at the government auctions account for less than 5% of Thailand's production, said Picheat Prommoon, a director at the Research Institute of Thailand.

 

Mr. Picheat said sales at Surat Thani central market will likely resume next week, when farm owners return to the province.

 

Exporters are starting to feel the crunch.

 

“It has been difficult acquiring unsmoked sheet a raw material recently,” said Luckchai Kittipol, the chief executive Thai Hua Rubber Public Co., a natural rubber exporter. “What we can get our hands on now is down to a fraction of the quantity we can usually purchase in this season.”

 

Mr. Luckchai, who is also an honorary president of the Thai Rubber Association, said his company would usually be able to buy about 1,000 metric tons of the raw material a day, but that has fallen below 100 tons recently.

 

Pongsak Kerdvongbundit, managing director at exporter Von Bundit, said the decline in supply is small, but there has been an impact.

 

Benchmark Tocom natural rubber for delivery in June was trading around ¥256 a kilogram Thursday afternoon compared with more than ¥535 in February 2011. It has fallen 11% since its most recent peak in mid-December.

 

Disgruntled Thai rubber farmers have tried to exert pressure on the government to provide support for commodity. The government has implemented a variety of measures, including providing subsidies for replanting, which reduces production in the short term, and buying rubber at above market rates.

 

But Thailand's pricing power has diminished in recent years in the face of fresh supply from emerging rubber producers, such as Vietnam, where production has risen 39% between 2010 and 2013, making it the No. 3 producer behind Thailand and Indonesia from No.5.