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Bouncing high on rubber

As the price of natural rubber (RSS-4 grade) touched an all-time high of Rs.174 last week, Kerala’s rubber planters are agog with the prospect of more gains.

From a low of around Rs 25 a kg almost ten years ago, the price of natural rubber has soared the past month, as has the price of latex, which now commands a price of around Rs 120 a kg, compared to Rs 100 a month ago.

The recent price spike has been triggered by lowered stockpiles in China – the largest consumer and the world’s largest auto market – which, in turn, caused futures in Tokyo to climb to $3,231 a tonne.

Blame – or praise – the monsoon rains for this phenomenon.

As the heavy rains hamper rubber tapping – rainfall has also disrupted production in Thailand, the world’s biggest producer and exporter – demand for rubber remains while supply stays tight.

And yes, rubber planters can still go to sleep tight under their blankets since prices are forecast to rise.

According to commodity analysts, soaring oil prices and increased domestic demand from automobile manufacturers will continue to push prices upwards.

Wherever you place the blame – futures trading or unregulated imports –.the trend, experts say, is for rubber to reach a level of Rs 200-220/kg in the next quarter.

Will this price level hold? Remember, rubber is essentially elastic – what goes up must ultimately come down.

According to the International Rubber Study Group (IRSG), global automobile manufacturers have scaled back production, cut jobs and closed factories due to declining demand, causing rubber futures to dip.

Rubber planters face a deadly combination – a worldwide economic slowdown, a deepening slump in the global automobile industry, and continuing low oil prices

As the fourth largest producer of natural rubber in the world, after Thailand, Indonesia and Malaysia, India, with a share of between eight and nine per cent of the world’s production, ought to be chary.

All the other rubber-growing giants are striving to increase productivity, but Kerala’s rubber planters are happy raking in the easy money. According to the Kerala State Planning Board’s Economic Review, the Stateaccounts for 81 per cent of the area under rubber in the country.

The coverage under the crop in 2008-09 was 5.17 lakh ha, higher by 5430 ha. over the previous year.

But productivity, which was 1,903 kg/hectare per year in 2008, dropped to 1,796 kg in 2009.

Unless Kerala’s rubber planters pull up their socks and tend to their plantations with the zeal displayed by their competitors in Thailand, Indonesia and Malaysia, they cannot expect to ride the price tiger for long.

Courtesy : thehindubusinessline

Missing figure on Rubber Statistics

Analysis of Indian Rubber Statistics 2009-10

1 comment to Bouncing high on rubber

  • Dear Chetta,
    Really I got some data which I desired to have from ur site.Thanks. I too a rubber small scale farmer. Tapping & curing to make sheets are two difficulties or problems facing by small farmers. Here we sell latex to society, who in turn exploit the poor farmers. I think it is better to keep the rubber in sheet form and sell at hi-price time. Any suggestions to make rubber sheets with out much difficulty. We own a rubber roller to.

    Another portfolio beneficial to small farmers is spices especially Nutmeg. Pls help us in this field also.