Rubber prices to shoot up as production declines

Rubber prices to shoot up as production declines



KOTTAYAM (Commodity Online): Natural rubber prices in India are set to shoot up thanks to unprecedented rains that have lashed across Kerala, the major rubber producing state in the country. Heavy unseasonal rains in September and October have wrecked havoc with rubber tapping in all the major rubber producing regions in Kerala.

Rubber industry traders and the Rubber Board of India estimate that production of natural rubber in October alone could plunge by more than 15% because of the unexpected rains. Rubber prices in the domestic market are hovering around Rs 185-190 range per kg as demand for the commodity is steadily rising thanks to the shortage of rubber.

Jeemon Jose, a leading rubber planter in central Kerala, said that rubber prices may hit Rs 220 per kg mark in the spot market by November. “It is for the first time that such heavy rains have played havoc with rubber tapping in Kerala. I think rubber production this year will decline by at least 20% percent because of the incessant rains,” he told Commodity Online.

Jose said rubber prices are on a bull run because of heavy demand from countries like China. “We are getting dozens of export enquiries from companies in China,” he said.

Kottayam-based Rubber Board estimates say that India may produce 8.93 lakh tonnes of rubber during 2010-11, while the rubber consumption would be around 9.78 lakh tonnes.

Rubber prices have nearly doubled in India in the last one year thanks to increasing demand and declining production. While on the spot market, farmers have been reaping rich dividends on higher rubber prices, the commodity has been hot on the futures trading market in the Indian commodity exchanges.

In the National Multi-Commodity Exchange (NMCE), rubber futures prices are hovering around Rs 195-200 per kg for various contracts.

Traders in the rubber futures market expect the commodity prices to touch Rs 220 per kg in the near future.
(Commodityonline.com)