March 26 (Bloomberg) -- Rubber jumped to the highest price since September 2008 after an Indonesian producers’ group said that output may decline this year.
Futures in Tokyo rose as much as 2.9 percent, extending yesterday’s 3.3 percent gain after the Rubber Association of Indonesia said on March 24 that output in the second-largest producer may drop to 2 million metric tons this year, from 2.4 million tons in 2009.
“Given Indonesia’s lower output forecast earlier this week, it’s hard to bet on a price decline,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone. The forecast “sent futures in Shanghai and Tokyo higher yesterday” amid increased demand for the commodity used in tires, especially from China, he said.
Rubber for August delivery jumped 2.9 percent on the Tokyo Commodity Exchange to 306.1 yen, the highest closing price since Sept. 9, 2008. The most-active contract climbed 5.9 percent this week, the first weekly gain in four.
Output from Indonesia may slump this year if unfavorable weather persists into the second half after rains disrupted first-quarter tapping, Asril Sutan Amir, chairman of the Indonesian industry group, said on March 24.
In the cash market, shippers in Thailand, the world’s largest producer and exporter, offered RSS-3 grade rubber for May shipment at $3.32 a kilogram, from $3.30 yesterday, according to Takaki Shigemoto, an analyst at research and investment company JSC Corp.
Production declines in Thailand from February to April, when rubber trees shed leaves and latex production slows during a period known as wintering.
Rubber for September delivery advanced for a third day on the Shanghai Futures Exchange, settled 0.7 percent higher at 24,855 yuan ($3,641) a ton after touching 25,025 yuan, the highest since March 1.
| Spurt in demand and supply woes push up prices. |
Up and high: Large scale capacity addition by the Indian auto tyre industry may accelerate demand for natural rubber.
Kochi, March 26
Global natural rubber prices continue to remain firm mainly on account of a sharp spurt in demand and heightened imports by China, India and Malaysia.
Preliminary estimates of import and consumption of rubber in January and February by the Association of Natural Rubber Producing Countries (ANRPC) reveal substantial growth over the previous year.
Figures released by the ANRPC show that imports by China surged 63 per cent for natural rubber and 118 per cent for compound rubber in the first two months of this year. And, more than 95 per cent of the imported compound rubber consists of natural rubber.
In Malaysia, natural rubber import rose 34 per cent. During the same period, India posted a 17 per cent growth in consumption of natural rubber and over 100 per cent growth in imports. The ANRPC also pointed out that large scale capacity addition taking place in the Indian auto tyre industry indicate the possibility of a further acceleration in natural rubber demand.
More than 45 per cent of the global consumption of natural rubber is from China, India and Malaysia. While these three are major consuming countries in the ANRPC, China and India are considered the pace setters of global demand and price trends.
Optimistic estimates
While member countries of ANRPC account for over 94 per cent of global rubber production, estimates provided by their governments indicate that the current year's production is expected to surge by six per cent. And even this estimate can be termed optimistic since the forecasts are based on favourable weather conditions prevailing over much of the rubber growing belts of the world. Already, reports of moisture stress and drought-like conditions emanate from Thailand and China that could undermine output expectations.
The ANRPC also reported that a 16.8 per cent rise in output estimate by Malaysia is also on the optimistic side given the progressive decline in tapped area during the past six years. A large extent of existing yielding trees in all major producing countries were planted during the eighties and they have now reached the declining phase in production. Therefore, the ANRPC said that the age of composition of the existing yielding area is quite unfavourable for an improvement in yield.
The buoyant demand, uncertainty in supply, weaker dollar and rise in crude oil prices have been supporting natural rubber prices. In addition, the fall in the Japanese yen since March 7 have also been supportive to the natural rubber markets. Natural rubber prices firmed up in all major global markets in Kuala Lumpur, Bangkok, Singapore and Kottayam during the second week of this month.
Rubber gains on global cues
Kottayam, March 26
Physical rubber prices scaled further highs on Friday. Sharp gains in the international rubber futures catalysed the domestic mood and it made all-round gains mainly on speculative buying and short covering.
According to observers, major manufacturers were still inactive though supply concerns haunted the market even at higher levels. Sheet rubber moved up to Rs 154.50 from Rs 153.50 a kg with comparatively dull volumes. The undercurrent was extremely bullish. The April futures for RSS 4 improved toRs 158.25 (156.96), May to Rs 160.90 (159.12), June toRs 160.60 (158.62) and July to Rs 160 (158.63) a kg on National Multi Commodity Exchange.
RSS 3 flared up at its April futures to ¥323.3 (311.3), May to ¥319 (306.4), June to ¥313.1 (303.3), July to ¥309 (300), August to ¥306.1 (297.6) and September to ¥304 (300) a kg during the day session on Tokyo Commodity Exchange.The April futures closed at ¥321.1, May at ¥319, June at ¥314.8, July at ¥309.7, August at ¥307.3 and September at ¥305 a kg during the night session.
RSS 3 firmed up sharply to Rs 155.39 (151.92) a kg on Singapore Commodity Exchange. The grade gained further to Rs 155.58 (152.55) a kg at Bangkok. Spot prices (Rs/kg) were: RSS-4: 154.50 (153.50); RSS-5: 153.50 (152.50); Ungraded: 151.50 (151); ISNR 20: 151.50 (151) and Latex 60 per cent: 100 (100).
Rubber Tappers Bank to be launched
Staff Reporter| The first of the banks will be opened at Poothrukka |
KOTTAYAM: The Rubber Board will launch a Rubber Tappers Bank as part of its efforts to find a solution to the problem of acute scarcity of rubber tappers.
The first of the banks, under the auspices of rubber producers' societies (RPS) will be opened at Poothrukka RPS, near Kolencherry, in Ernakulam district an March 29, a press note said.
Chairman Sajen Peter will inaugurate the new venture at a function to be chaired by vice-chairman Siby Monippally.
Rubber Tappers Banks have been envisaged as self-help groups (SHGs) of 20 to 30 trained tappers working under the RPS. Farmers will get the service of skilled tappers on payment of fee. .
The bank will also pay incentives to the tapper for additional produce realised by him by way of tapping. They will get additional
financial advantage such as insurance coverage and savings under the Group Life Insurance-cum-Terminal Benefit Scheme of the Board.
They can also enrol for the Personal Accident Insurance Scheme under the Price Security Fund Trust. The Board will provide them uniform and monthly allowance for maintenance of their implements, the press note said.
MY VIEW
Kottayam yesterday midnight got its first summer rains which lasted for nearly four hours.
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