Monsoon pushes up rubber prices

Prices in the local rubber market have moved up as compared to those abroad. Kochi and Kottayam, the leading Kerala markets, today quoted Rs 171 a kg for the RSS-4 grade; the price in Bangkok was Rs 162 a kg.

The rise here is mainly due to a shortage of quality sheet rubber, especially with monsoon season's commencement. Tapping has got affected in most plantations across this state due to heavy rain in the past couple of weeks. Processing has also been hit, which is why good quality RSS-4 sheet rubber is in short supply, said, N Radhakrishnan, a leading stockist here. Production is likely to be affected substantially in June and July, with forecasts indicating a good monsoon.

The price at Bangkok was Rs 171 a kg as recently as May 31. Experts say poor offtake in Europe and China has ensured good stock in the global market, leading to the drop in prices. Global production is also expected to increase this year by three or four per cent.

Radhakrishnan says the higher price in India is comfortable enough for the industry, since the addition of import duty and freight charge would make import unviable as of now. Till mid-May, local prices were almost at par with international ones. The trend has since reversed.

The Rubber Board had said the total stock as on April 30 was 247,000 tonnes. Leading stockists dispute this. "There is a shortage. It is very difficult to procure even five tonnes," said a trader here. "If the total stock is above 200,000 tonnes, why are farmers and stockists not unwinding what they have, even at these better prices?"

Strong demand might drive the market to a mild bull phase. Coupled with poor output during the monsoon, this might enthuse growers for a short while, said Radhakrishnan. Further downward movement in global prices might lead to more import. During June and July last year, production was 62,000 and 68,000 tonnes, respectively, according to Rubber Board data.