Rubber prices continue slump as tapping halts at large plantations

Growers say the realisation price for rubber is Rs 100 a kg against the production cost of Rs 105 to 110 a kg

The price of rubber at home and abroad has continued to fall.

On Wednesday, the Bangkok market, global headquarters of natural rubber (NR), quoted Rs 82 a kg for RSS-3 grade; SMR-20, preferred by importers, was Rs 77 a kg. Poor demand from major importing countries, especially of China, was the main reason.

In India, the Rubber Board quotes Rs 114 a kg for the RSS-4 variety. Market sources say trading is at a much lower price of Rs 100 a kg.

Experts point to two reasons, a drop in demand and the crash in crude oil prices, which drops the price of synthetic rubber.

Kerala, the country's top producing state, has entered the main output season of the year but tapping has been stopped in major centres, especially at medium and large-scale platations. It is active only in small plantations, where the owner does the job. Growers say production cost is Rs 105 to 110 a kg, against a price realisation of Rs 100. Sources at the Association of Planters of Kerala say, in large plantations, the cost of production is Rs 150 a kg.

The International Rubber Study Group predicts this situation of excess supply will continue till 2020-21.

Roughly 30 per cent of annual production is normally in the September to January period. Production was 305,000 tonnes in the year-ago period. This is likely to fall by 50 per cent this year, market sources have said. However, even this would not lead to better prices, as global prices are low and attractive to importers.