Rubber Board lowers production estimate

The Rubber Board revised production-consumption estimates for the current financial year in tune with the slow pace of growth recorded in December 2010. According to the revised estimates, the total annual production would be 851,000 tonnes against previous year’s figure of 831,400 tonnes, rising 2.4 per cent.The consumption estimates were lowered to 948,000 tonnes indicating growth of 1.9 per cent only.

Earlier the board had projected production at 893,000 tonnes and consumption at 978,000 tonnes.

Estimates were lowered due to the latest negative growth trend in production and consumption. According to the board’s latest data, production in December increased marginally at 0.6 per cent. Consumption had negative growth of 1.3 per cent in the same month. This is for the first time in the current financial year that consumption registered negative growth. Hence the revision in the annual estimates.

Slow growth in production
Natural rubber [NR] production slowed down, signaling a rally in prices in the next quarter of FY11. Latest estimates of the Board revealed that the production in April-December period of FY11 increased 2.8 per cent compared to the same period of the last financial year.

In April- November period, production increased 2.9 per cent. During April-October, production recorded an increase of 4.5 per cent. Earlier much hope was placed on the production in December because October-December is the peak season in the rubber production cycle.

But, estimates indicate production has not peaked to the expected levels even in the time of very high price band for the product. This, according to growers is due to incessant rainfall in December that affected the tapping of rubber trees. A serious shortage for labourers, especially in small and medium plantations is also a serious concern in the case of NR production.

In April-December, the total production increased to 649,650 tonnes as against 631,750 tonnes in the same period of the last financial year. A steep fall is evident as production during April-December was 694,315 tonnes when the average price of benchmark grade RSS-4 was Rs 120 a kg. The increase recorded during that period was 7.9 per cent. Amidst the greatest rally on the price front in 2010 (current price is Rs 207), the increase in production is very thin, leading to shortage during the off season (March-May).

Apart from the unfavourable climate, production was also affected by poor performance of re-plantation of aged trees during the last three-four years.

The sharp increase in prices during this period tempted the farmers to tap the maximum with the existing trees. This will endanger the supply of the cash crop in the coming years especially the demand for rubber is on a rise across the world. Increase in the price of synthetic rubber [SR] also adds much pressure on the price line of NR.

The demand is expected to go beyond 1 million tonnes by 2012, but the progress in production does not match the increase in the usage.

The increase in the monthly output in December was marginal at 0.6 per cent. Production in December was 101,500 tonnes, compared to 100,850 tonnes in December 2009. Surprisingly, the data estimates a fall in consumption during December by 1.3 per cent.

Till November, consumption was increasing but December paints a different picture on national consumption. In December, consumption dropped to 77,500 tonnes, compared to 78,500 tonnes in the same month of 2009.

The stock position by the close of 2010 was 307,170 tonnes as against 269,740 tonnes as on December 31, 2009. The board clarified that about 65 per cent of the said stock is in the usable form by tyre companies, which is enough for more than two months consumption. This indicates a squeeze in the actual stock in the country which will be yet another concern in the coming year.