Rubber prices may rise by about Rs 10 per kg this month

Rubber prices may rise by about Rs 10 per kg this month
June 5, 2011




New Delhi, Jun 5 (PTI) Natural rubber prices may rise by up to Rs 10/kg in the domestic market this month as production is expected to fall with the onset of monsoon in Kerala, a major producing region.

Rubber prices, which are currently ruling at Rs 226 per kg, are likely to rise further to Rs 235 per kg, traders said.

“As the monsoons have hit Kerala, tapping has stopped. Rubber prices may touch Rs 235/kg in June,” Indian Rubber Dealers Federation President George Valy said.

During monsoon, rubber productions almost stops as rains hinder tapping of rubber trees for latex.

He pointed out that farmers have curtailed supplies in last 2-3 days in anticipation of rise in rubber prices.

Valy, however, said that prices are unlikely to rise sharply as demand is expected to remain subdued as import has increased on low global prices and a change in import duty structure from 20 per cent of the price of the imported good to Rs 20 per kg or 20 per cent, whichever is lower.

Rubber prices at the international spot market in Bangkok are currently ruling at Rs 234.72 per kg.

Market analysts say that global spot rubber market is likely to remain firm due to limited supplies from Thailand because of rains, but it is unlikely to see a sharp rise with lesser demand from China.

There are also concerns over a slowdown in the US manufacturing sector, they added.





Rubber industry hurt by price fluctuations
June 6, 2011


UNSTABLE prices are reducing rubber exports this year, even though prices have increased sharply compared with last year, said exporters and producers.

Ko Htwe Nyein Aung, the owner of Sein Sein rubber production in South Okkalapa township, said rubber prices have increased since the last week of April.

“In the last week of April, 1 pound of Ribbed Smoked Sheet-1 [RSS] rubber cost K1400, RSS3 cost K1350 and RSS5 was K1300,” he said.

“But prices of export-quality rubber increased at the end of May to K1700 a pound for RSS1, K1600 for RSS3 and K1500 for RSS3,” he said.

However, he said that even though prices are higher this year, exporters are making less money.

“Rubber prices have increased sharply over last year. In June last year, a pound of RSS3 fetched K1200 and RSS5 was only selling for K1000. But exporters aren’t making much money this year because prices are changing too quickly, which is spooking buyers and sellers alike,” Ko Htwe Nyein Aung said.

U Kyaw Mya, a rubber exporter in Yangon, said he has reduced the amount of rubber he is stockpiling this year.

“We normally store large amounts of rubber to export but I’m not doing that this year because I don’t trust the export environment. Last year, I stockpiled about 100 tonnes to export but I’ve only bought about 40 tonnes this year,” he said.

U Khine Myint, the general secretary of the Myanmar Rubber Planters and Producers Association, said that demand from China, the largest buyer of Myanmar’s rubber, has fallen.

“Only 10 percent of our production goes to local market and 90pc of production is for export. This year, some tyre factories in China have faced labour problems and have reduced their production, which is why demand from China has decreased. And our buyers in Japan have postponed orders since the earthquake in March,” he said.

He added that local demand has also tailed off.

“Last year, local demand was great until March because shoemakers here made lots of orders but since then it has steadily dropped off. Since April this year we’ve had almost no orders,” U Khine Myint said.





NR prices largeley unchanged around $5
June 6, 2011


Tokyo — Prices on Tokyo’s rubber exchanges moved upward over the weekend on thin trading.

On Tokyo’s Tocom Exchange, prices for the six-month contract rose by about yen 1, closing at yen 390 ($4.87) per kg on Monday 6 June. Shorter-dated prices remained unchanged, trading at around yen 415.

In Singapore, SGX said short-dated RSS3 were trading unchanged from Friday at around $5.21 on thin trading with longer-dated contracts slightly higher, priced between $4.99 and $5.04. Short-dated TSR 20 was trading up by about $0.01 at $4.68.

In India, the NMCE saw June deliveries rise by Rs 2 to close at around Rs227 ($5.08) per kilo

In China, the Shanghai Futures Exchange also saw prices rise by a fraction of a yuan, with June deliveries trading at around Yuan 35.6 ($5.49) per kilo.





Expansion of rubber plantations benefitexperts some parties: research
June 5, 2011


The expansion of rubber plantations benefits only some parties when prices increase, and without better control the benefits will not offset the negative impacts on food security and the environment, according to a research paper.

Completed by Assoc Prof Somboon Jarernjiratrakul, an economics lecturer at Prince of Songkla University, the paper suggests a more organised approach to overseeing plantations for sustainability in economic and environmental terms.

Rubber plantations from 2004-10 expanded 5.91 per cent on average every year to 17.96 million rai in 2010 from 12.95 million rai in 2004. Thailand is second only to Indonesia at 21 million rai, but is the world’s largest rubber producer with 3 million tonnes last year versus 2.83 million tonnes from Indonesia.

“The plantation areas expanded largely due to price increases, which are driven by factors – higher demand for natural rubber, speculation in futures markets and higher prices of synthetic rubber. Expanding upon the external variables subjects farmers to risks and this will also affect food security and cause environmental as well as social impacts,” the researcher said.

On the economic front, farmers are more exposed to external factors, as rubber demand depends on economic growth, which becomes more and more unstable in the more globalised era. There is also no guarantee that in 10 years rubber demand in China – the world’s fastest-growing economy – would increase 12.90 per cent per year, like in the past decade.

Notably, rubber prices are driven up or down by quotations in the futures market and government policies, not purely by demand. This explains why the rubber price rose from less than Bt30 per kilogram in 2002 to nearly Bt200 this year.

The paper shows that in a Songkhla village, nearly all villagers own rubber farms – 15 rai on average per household. But 80 per cent of the households own one pickup truck.

Yet, speculation from February 21-March 14 this year drove down the rubber price in Thailand from Bt183.64 to Bt95, much below the usual gap with the Singapore price. But upon Deputy Prime Minister Suthep Thuagsuban’s assurance of higher prices on March 16, the price jumped to Bt121.38 on the next day and further to Bt169 on April 7.

Last but not least, Thai farmers are not alone in the world in turning to this commercial crop. Plantations have increased sharply in China, Vietnam and the Philippines. If the global economy turns dismal again and drives down demand, oversupply is very likely, the paper said.

As plantations expand quickly, this leads to huge demand for seedlings and to premature rubber cutting – and eventually lower quality. Worse, farmers now turn paddy fields into rubber farms and some encroach on forestland.

For example, half of the paddy fields in well-irrigated Tambon Harnpho of Chaison district in Phattalung have been converted into rubber plantations in the past three years.

In Khao Poo Khao Ya National Park in the South, 122,587 rai or 28.26 per cent of the park’s area now house rubber trees. Plantations are also seen in the Khlong U-Tapao watershed in the South. Encroachment in first- and second-tier watersheds is believed to affect biodiversity, with a single plant. Rubber trees are less able to absorb water and this could lead to lower natural water levels and landslides.

Plantations grow larger mainly when prices are high, with support from the government. Yet, the government has failed to adopt a long-term plan to develop the industry.

“There was a strategy to turn Thailand into the world’s rubber hub. But of the announced budget of Bt10 billion, only hundreds of millions have been invested. When the price was high (which allowed the government to reap Bt13.5 billion taxes from the export of 2.7 million tonnes in 2010), the government did nothing to put the money to good use.

“However, when the price fell, a strategy was launched but under pressure, it produced low yields. The rubber price intervention programme during 1993-2000, for example, cost the government Bt10.50 per kilogram,” he said.

A more streamlined strategy must be put in place to develop the rubber industry from upstream to downstream, the paper said.

In 2009, rubber exports – at a volume of 2.7 million tonnes – totalled Bt146.2 billion. But exports of rubber products like globes and tyres in the year, which consumed only 400,000 tonnes of para rubber as a raw material, hit Bt152.8 billion.

This shows that more downstream projects would generate a higher return for farmers and the entire economy.

For quality rubber and limited impacts on food plantations and forestland, the government should exert better control over the expansion of rubber plantations.

“All parties – the government, government units, farmers and others – must brainstorm to turn this zero-sum game or negative-sum game into a positive-sum game – where all parties are winners,” the paper concluded.





Spot rubber rules steady
June 5, 2011


KOTTAYAM, JUNE 4:
Spot rubber finished unchanged on Saturday. The weekend session was rather inactive since the domestic futures closed slightly lower on the National Multi Commodity Exchange (NMCE).

The June series slipped to Rs 227.68 (227.97), July to Rs 232 (232.92) and August to Rs 233.52 (234.19) while the September series inched up to Rs 232.51 (232.09), October to Rs 232 (229.80) and November to Rs 231.80 (231) a kg for RSS 4 on the NMCE.

Spot rates were (Rs/kg): RSS-4: 226 (226); RSS-5: 222 (222); ungraded: 218 (218); ISNR 20: 215 (215) and latex 60 per cent 135 (135).