Natural rubber prices to rise further on low output

The natural rubber (NR) market, which today quoted Rs 102 a kg for RSS-4 grade, is poised for further appreciation in prices as domestic production is projected to be lower this year. At the current level of production, the annual output is expected to fall by 10 per cent. The trend during April-July indicates that the overall production is likely to be lower this time which clearly favours the appreciation in prices.

During April-July, a decline of 13 per cent was registered in production at 209,825 tonnes against 242,115 tonnes in the same period last year. According to leading rubber dealers, 10 per cent drop in production would add much pressure on the priceline as global demand for the crop, especially from China, is on the increase. Total domestic production in 2008-09 had increased by 4.8 per cent at 865,000 tonnes against 825,000 tonnes in 2007-08.

So loss in production would make the market tighter in the current financial year except during October-December period, when production is at its peak.

The current all India average productivity is 1,775 Kg /hectare/year, which is the highest globally. But according to experts, the sluggishness in the re-planting of plantations might naturally hit the productivity which will be a threat to the overall production. According to them at least 115,000 hectares of plantations is badly in need of re-planting. Because of the prevailing higher prices, farmers are eager to take maximum advantage from the trees. New plants require 6-7 years to be tapped and in the beginning yield will be lower.