Untimely rain pushes up rubber prices

Natural rubber (NR) is witnessing a surge in prices on the back of subdued production owing to heavy unseasonal rain. This is despite the crop has entered the main production season (October-December).

Growers said the heavy rain experienced in the last couple of weeks had hampered output in major producing areas and, thus, affected the supply of quality rubber sheet to the marketplace. The benchmark RSS-4 grade today scaled Rs 85 a kg level from a low of Rs 78.50 last week.

Rubber Board had estimated a sharp rise in output during the main production season this year. But production has not picked up during the first ten days of this month.

The October-December season accounts for 40 per cent of the total annual domestic production.

As rains are expected to continue for at least another week, the October output is expected to be affected, which again is likely to result in shortage in mid-season. Traders said, "Rain will be the most critical factor to determine the course of the natural rubber market going forward."

Globally, the natural rubber sector presents a contrasting scenario, in which the prices today fell marginally on the back of a good production season in most of the producing countries.

For example, RSS-3 on Tocom today weakened to Rs 82-83 a kg, after scaling Rs 87 a kg level a couple of days ago.

As the domestic market is influenced by Tocom futures, price of lot has decreased to Rs 81-81.50 and ISNR - 20 has a price tag of Rs 81.50 today. The market had a rather weak closing today though RSS-4 grade moved on a steady note at Rs 85.

A leading trader in the city said, "Production should see a rise on the back of better price realisations at present."