Domestic rubber output may rise 4.1% in Feb-April

Domestic rubber output may rise 4.1% in Feb-April

But growth will not be able to reach levels seen in 2008.

--------------------------------------------------------------------------------

At the global level, supply of natural rubber registered a marked improvement in January.


--------------------------------------------------------------------------------

Kochi, March 1

Indian rubber production increased 6.5 per cent in January. While observing that production is expected to go up by 4.1 per cent in the February-April period, the Association of Natural Rubber Producing Countries (ANRPC) pointed that even this growth will not enable the sector to reach the levels attained two years ago.

Target scaled up

The production in January was 98,000 tonnes against 92,000 tonnes clocked last year.

However, production in January 2008 had been as high as 1,04,000 tonnes, the Rubber Board's Statistics and Market Development Committee, a statutory forum represented by all stakeholders of the rubber industry, pointed out. Backed by the spurt in production in January, Indian rubber production target for the year has been scaled up to 9.13 lakh tonnes, a growth of 11.3 per cent.

Area likey to rise

The average yield per hectare is expected to touch 1,934 kg while the total yielding area under rubber plantations are expected to go up marginally by 6,000 hectares.

The growth in average yield per hectare for the current year is all the more notable since productivity came down to 1,760 kg/ha in 2009 from 1,903 kg/ha in the previous year. At the global level, supply of natural rubber registered a marked improvement in January.

The uptrend could be considered as a beginning of return to normal levels after the sharp fall in the drought-ridden first quarter of the previous year, the ANRPC, which is an intergovernmental agency among 10 major producing countries that account for 94 per cent of global production, said. The spurt in global rubber production in January was backed by Thailand's production which grew sharply by 23 per cent mainly on account of 16,000 hectares of newly planted area attaining yielding age.

Global spurt

Thailand is a major producer in the global rubber atlas and accounted for 3.53 lakh tonnes in January.

Production in Malaysia grew 43 per cent, to 1.05 lakh tonnes in January, yet it was far lower than the production for the same month in 2008. Production in Cambodia was up 25 per cent, India and Thailand by 6.5 per cent and Sri Lankan production was up four per cent.

Tricky period

But the wintering season from February-April could be tricky as production across major producing countries fall every year.

However, a prognosis of this year's ‘wintering supply' indicates an improvement from the same period of last year. Although the wintering supply this year is likely to improve over last year, they are unlikely to reach the levels attained in 2008 across Malaysia, India and Vietnam, ANRPC said.

Driving growth in rubber sector

With approximately 9 per cent share in world production, India is the fourth largest producer of natural rubber (NR). Production is highly decentralised and in smallholdings. As much as 89 per cent of planted area and 93 per cent of NR production is from small holdings.

Interestingly, despite not having regions geographically best suited to growing NR, India continues to record the highest productivity in the world with an average yield of over 1,850 kg a hectare. This demonstrates that even in smallholdings precision farming can be practised to boost yields.

Productivity has further improved through the Rubber Plantation Development Scheme in the 11th Plan. The scheme provides subsidy on planting, supply of critical inputs with price concession, assistance for soil and water conservation as also generation and distribution of quality planting material. A steady increase in area under cultivation in recent years resulted in an acreage of 6.5 lakh hectares in 2008-09 which generated production of 8.6 lakh tonnes.

Diversification moves

India's NR production has been traditionally confined to Kerala and Tamil Nadu. Efforts are now on to diversify the production base by promoting rubber cultivation in Karnataka, Andhra Pradesh, Goa, Orissa and the North-East. Rubber cultivation generates livelihood opportunities for a large number of people.

While NR is considered an agricultural commodity in India because of its farm roots, under the World Trade Organisation, rubber is categorised as an industrial commodity. Thailand, Indonesia and Malaysia are large producers. There is a positive correlation between economic activity and rubber usage.

In recent years, rising industrial activity in India has seen big growth in rubber demand and consumption. Industrial use of rubber includes tyre and non-tyre. India is both exporter and importer of rubber. In the last three years, rubber exports ranged between 45,000 and 60,000 tonnes, while imports were in the 80,000-90,000 tonnes range. Clearly, imports are more than exports which shows tightening domestic availability.

For the financial year 2009-10, the export target for NR has been fixed at 50,000 tonnes. There is no fixed quota for NR exports on account of high volatility in prices after Quantitative Restrictions were lifted from April 1, 2001.

Auto drive

The automotive tyre sector is the single largest consumer accounting for 50 per cent of total rubber consumption. With India emerging as a hub for automobiles, demand from this segment is set to explode. This is followed at a distance by bicycle tyres and tubes (15 per cent), footwear (12 per cent), hoses (6 per cent) and so on.

Going forward, rising incomes and industrial activity are set to provide a big boost to the rubber sector. Advances in rubber technology help boost demand through newer application.

However, efforts to replant ageing trees need redoubling. By 2020, India will consume nearly 2.2 million tonnes of rubber, a significant part of which can be produced domestically by expanding cultivation in non-traditional areas.

Cheap labour, availability of technical expertise and vast domestic market are major advantages which if leveraged properly will take the rubber sector to the path of faster and sustainable growth.

Spot rubber gains on short covering

Kottayam, March 1

Physical rubber prices showed a better trend on Monday. The market remained firm in continuation of the bullish sentiments following the union budget and sheet rubber improved further to Rs 142.75 from Rs 141.50 a kg on fresh buying and short covering. There were no fresh enquiries from the tyre sectorbut supply concerns kept most of the traders active in the main marketing centres.

Tokyo Futures gain

RSS 3 improved with March futures rising to ¥286.6 (¥284.9) (Rs 147.52), April to ¥289.6 (¥287.4), May to ¥291.1 (¥289.3), June to ¥293.4 (¥291.4), July to ¥295.4 (¥293.8) and August to ¥297.6 (¥296.1) a kg for during the day session on Tokyo Commodity Exchange (TOCOM). The May futures for the grade firmed up further to ¥291.9, June to ¥294, July to ¥296.2 and August to ¥298.6 a kg while the March and April futures remained inactive during the night session. RSS 3 finished marginally higher at Rs 151.24 (151.17) a kg on Singapore Commodity Exchange (SICOM).

Spot rates were (Rs/kg): RSS-4: 142.75 (142); RSS-5: 139 (138); ungraded: 138 (137); ISNR 20: 137.00 (136.50) and latex 60 per cent: 91 (91).
Indian Futures was closed on account of HOLI.

International news
Rubber Output During ‘Wintering’ Season to Increase

March 1 (Bloomberg) -- Natural rubber output from key suppliers during the seasonal low-production period will improve this year, boosting exports, according to the Association of Natural Rubber Producing Countries.

Output in the so-called “wintering season” probably will surge in Vietnam, the world’s third-largest shipper, Malaysia and India, said the association, which represents countries accounting for 94 percent of global production.

Rubber futures traded in Japan have gained 8.4 percent this year, after doubling last year as production dropped and the global economic recovery and government stimulus measures in China and U.S. boosted demand for tires.

Supply declines from February to April every year as rubber trees shed leaves and latex output slows.

Vietnam’s wintering output probably will grow 14 percent compared with a year earlier to 20,600 metric tons, helping boost total production this year by 6.4 percent to 770,000 tons. Exports will rise 6.6 percent from last year, the group said in its monthly newsletter.

In Malaysia, the fourth-biggest exporter, low-season output will surge 43 percent to 243,000 tons, the group said. India’s output during the season may rise 4.1 percent to 154,000 tons, and total output this year will climb to 913,000 tons, compared with 853,000 tons forecast earlier, the group said.

The association’s forecast on production in Indonesia, the second-largest producer and exporter, was unchanged at 2.77 million tons. The country’s exports are estimated at 2.3 million tons.

The association represents Cambodia, China, India, Indonesia, Malaysia, Papua New Guinea, Sri Lanka, Thailand and Vietnam.

Total supply from the association’s member countries declined 5.1 percent in 2009 to 8.7 million tons. Total plantation area expanded to 7.13 million hectares by the end of 2009, from 7.02 million hectares a year earlier, it said Jan. 26.

Rubber Falls as Oil Retreats, Thai Supply Drop May Be Limited Share Business

March 2 (Bloomberg) -- Rubber decreased for the first time in three days as a drop in crude oil reduced the cost of making rival synthetic products used in tires, and on speculation that a seasonal decline in Thai supply may be limited.

Futures in Tokyo lost as much as 3.2 percent, erasing gains posted in the previous two days. The price reached this year’s peak of 306 yen per kilogram ($3,426 a metric ton) on Jan. 15, which was the highest level since September 2008.

Crude retreated after reaching the highest level since Jan. 13 yesterday on forecast that a report this week will show U.S. crude supplies increased for a fifth week. Natural rubber supply in Thailand, the largest producer and exporter, had a “robust” 23.8 percent annualized growth in January on favorable weather, according to Association of Natural Rubber Producing Countries.

“Supply from Thailand during the wintering season this year may not decline as much as last year, as exporters have enough products to offer after active production,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone. During wintering, or the low production season between February and April, rubber trees shed their leaves and latex production slows.

Rubber for August delivery, the most-active contract, lost as much as 9.6 yen to 288 yen before trading at 290.4 yen at 12:49 p.m. local time on the Tokyo Commodity Exchange.

Crude oil for April delivery traded at $78.78 a barrel in electronic trading on the New York Mercantile Exchange at 11:36 a.m. Tokyo time. The price rose to $80.62 yesterday.

Crude supplies probably rose 1.6 million barrels last week from 337.5 million, according to the median of eight estimates from analysts surveyed by Bloomberg News before an Energy Department report this week.

Output Will Improve

Natural rubber output from key suppliers during the low- production period will improve this year, boosting exports, ANRPC said in its February report. The group represents countries accounting for 94 percent of global production.

Production in Vietnam, the world’s third-largest shipper, during the wintering season will probably expand 14 percent from a year earlier to 20,600 tons, helping raise total output this year by 6.4 percent to 770,000 tons, the monthly report said. Exports will rise 6.6 percent from last year, it forecast.

May-delivery rubber on the Shanghai Futures Exchange fell 1.2 percent to 24,565 yuan ($3,597) a ton at 10:41 a.m. local time. It retreated after reaching 25,580 yuan yesterday, the highest level since Jan. 21.