Rubber prices hit all-time high-Spot rubber improves on global cues

Spot rubber improves on global cues
Kottayam, June 24

Rubber prices ruled firm on Thursday. In spot, the market improved following the gains in the domestic and international rubber futures. The under current became strong as the TOCOM June series expired higher indicating the global demand. Sheet rubber improved to Rs 174.00 from Rs 172 a kg though the tyre sector continued to stay back as usual. The traders were under the shadow of short supplies.

Futures firm

In futures, the July series firmed up to Rs 174.67 (172.41), August to Rs 168 (167.40), September to Rs 163.30 (162.68) and October to Rs 160.21 (160.25) a kg for RSS 4 on the National Multi Commodity Exchange. The June futures expired at ¥372/Rs 193.73 (¥364) while the July futures improved to ¥356.7 (¥349.5), August to ¥336.6 (¥330.2), September to ¥314.5 (¥308.3), October to ¥292.5 (¥387.4) and November to ¥280.9 (¥277.9) a kg for RSS 3 during the day session on the Tokyo Commodity Exchange. RSS 3 (spot) increased to Rs 168.95 (166.78) a kg at Bangkok.

Spot prices were (Rs/kg): RSS-4: 174.00 (172); RSS-5: 171.50 (170); ungraded: 169.50 (168); ISNR 20: 154 (153) and latex 60 per cent: 122 (121).



Rubber prices hit all-time high
Bringing cheer to the nearly a million rubber farmers in Kerala, the price of natural rubber (RSS-4) touched an all-time high of Rs.174 a kg in the Kottayam market and Rs.173 in Kochi on Thursday.

The rubber price, which hit a rock bottom of Rs.25 a kg a decade ago, has been on the march for nearly three years now. Market watchers say the price rally is likely to continue in view of the heavy rain which prevent rubber tapping. The month opened at Rs.168 a kg and it grew steadily to the record price on Thursday. The price of latex too has risen to around Rs.120 a kg from below Rs.100 a month ago.

The mismatch between demand and supply is the main propeller of the price rise. Thanks to the booming automobile industry in India, the demand for tyre has escalated. (Natural rubber is the main raw material in tyre manufacture.) Globally too, the demand for natural rubber is on the rise.

There is supply stickiness at the international level too. One of the reasons is the political turmoil and the consequent constraints on production and marketing in Thailand, which has emerged as the top producer of rubber. While major producing countries such as Thailand, Indonesia and Malaysia are fast switching over to block rubber, Kerala, which produces more than 90 per cent of India's rubber, is still sticking to sheet rubber which has its own captive market in India.

N. Radhakrishnan, former president of the Cochin Rubber Merchants Association, blames futures trading in rubber for the price escalation. He sees no major reason other than the speculative dealings brought in by the futures trade which began in 2004. “There is no physical delivery of the product,” he told The Hindu. “It is computer-based deal and often 10 to 15 times of the actual production are put on sale.” He thinks that the current price rally will be ultimately harmful to both the rubber industry and farmers. “Only the speculators stand to gain,” he rues.

The growers, expecting better prices in the future, hold back their stock and this creates artificial scarcity, thus leading to the price rise, market sources said. Usually, during the monsoon season, prices rise as there is heavy shortfall in supply because the tapping operation is hampered, they point out.

However, for now, the farmers are smiling and the Kerala economy, which has relied on rubber and Gulf money for meeting the State's financial needs, is smiling too.



Campco 's rubber procurement centre in Kerala
Mangalore, June 24

The Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Ltd opened a rubber procurement centre at Bandadka in Kerala recently. A press release said here that Mr Nalin Kumar Kateel, Rubber Board member, inaugurated the rubber procurement centre, in the presence of the Campco President, Mr K. Padmanabha, and the Campco Managing Director, Mr A.S. Bhat. Mr Kateel urged the cooperative to start its own rubber processing unit on the lines of its chocolate factory. “The cooperative, which started the chocolate factory three decades ago to help cocoa growers in the region, should now think of starting a rubber processing unit,” he added. – Our Bureau



Rubber, tea estates set to gain from rain, sunshine
But showers inadequate for cardamom plants.
Almost 70-75 per cent of the plantations are reported to have undertaken rain-guarding of their trees to ensure that tapping continues.


Kochi, June 24

The intermittent rain and sunshine last week augurs a better crop for the rubber and tea plantations of South India, but is likely to dampen the cardamom production. Bouts of rains and sunshine is the ideal weather for rubber plantations since it augments better production as well as enable tapping operations, Mr N Radhakrishnan, former President of the Cochin Rubber Merchants Association, said.

The farmers were already enthused by the high reigning prices and these ideal weather conditions would have provided the final catalyst, Mr Radhakrishnan added. Also, almost 70-75 per cent of the plantations are reported to have undertaken rain-guarding of their trees to ensure that tapping continues unhindered even in the rains. However, arrivals to the markets have thinned out.

Renewed buying

And this had nothing to do with tapping or production but has more to do with speculation and holding back of stocks, sources in the trade said. The thinning arrivals were mainly due to the high prevalent prices which have prompted the farmer to hold back his stocks in anticipation that the price rise might be sustained into the coming days, the sources added. Reports of renewed buying by China from global rubber markets have also propped up the Indian rubber prices.

While international rubber sheet prices had often overtaken Indian prices in the recent past, sources pointed out that Standard Malaysian Rubber (SMR) prices were often reigning lower than the Indian prices. The corresponding domestic grade would be the Indian Standard Natural Rubber (ISNR) which is most often of a lower quality. While SMR is made from pure latex, ISNR is made from crump rubber, which is the residue from the hardened latex.

While the superior SMR prices are quoting in the Malaysian markets at Rs 135 a kg, the inferior ISNR prices are quoting over Rs 150, Mr Radhakrishnan said. This is mainly because of the weak demand for SBR from the developed markets of the West which were its traditional big importers. Most of the Asian markets trade in rubber sheets. Trade sources said that it would be feasible for India to import SMR at the current prices to stem the Indian price rise. However, they conceded that any news of imminent imports into India was likely to trigger price spiral in SMR.

Crop arrivals

Reports indicate that intermittent rains coupled with sunshine have resulted in a flush of new leaves in South Indian tea plantations and the crop arrivals have begun to pick up. And if the favourable weather condition persists, the crop in the coming months is likely to look up.

However, crops such as cardamom require huge amount of water and adequate amount of shade. The intermittent rains reported in several growing regions are reportedly not adequate to recharge the groundwater and ensure a good crop. But, we are only in the early part of the monsoon and consistent rains in the months ahead could very well change the outlook, farmers pointed out.



Rubber Board to hold growers meet today
Our Bureau

Kochi, June 24

With a view to collect and compile the experiences of growers who have either successfully adopted age-old indigenous knowledge to suit rubber cultivation, or successfully conducted their own trials and experiments in their farms to create new models that can be emulated and replicated elsewhere, the Rubber Board has convened a rubber grower's conference on June 25.

The conference is to be inaugurated by Mr Sajen Peter, Chairman of the Rubber Board at the Rubber Research Institute of India, and presided over by Dr James Jacob, Director of RRII. This interactive conference is to be attended by growers as well as scientists and extension officers of the board.

Discussions

Twenty two growers will present their papers in addition to 20 poster exhibitions, a press release from the Rubber Board said. The areas of discussion would include rubber propagation, new cultivars, land preparation, planting, maintenance and after care of holdings, manuring, soil protection and water conservation, reduction of immaturity period, plant protection and crop processing.