Rubber prices head north

Contrary to expectation "� and even some estimates "� of a subdued natural rubber market, prices in both spot and futures markets are heading north ward.

According to leading city-based dealers, both Tocom and domestic futures have edged up today, influencing the spot market greatly. As a result, the price of benchmark grade, RSS-4, today rose by Rs 1.50 from yesterday's closing rate to settle at Rs 78 a kg.

Ten days ago, RSS-4 grade was hovering around Rs 75.50 and it was expected that the month of December would see prices moving southward.

Most of the traders, too, concurred that the sharp rise in prices in futures contracts was the only reason for the surge in spot prices.

N Radhakrishnan, president, Cochin Rubber Merchants Association, said even higher tags were not being able to attract sellers as they were expecting even higher rates going forward.

Tocom RSS-3 futures yesterday settled at Rs 73.40 a kg, up by Rs 3 from the previous day's close, which set in an uptrend in trading in the domestic market.

In the morning trading session, today, several NMCE RSS-3 contracts were up by Rs 1 on an average "� December contract was quoting at Rs 79.40, January at Rs 80.50, February contract at Rs 82.10 and March contract at Rs 83.25.

Meanwhile, the scenario on the output/supply side is that though production is at its peak time now, supplies to terminal markets "� such as Kochi and Kottayam "� have not picked yet, as most growers are still not ready to release their stocks in anticipation of realising higher prices in the coming days.

The average daily production had gone up to 3,500-4,000 tonne, but trading was not picking up, said a Kochi-based dealer.

While according to Rubber Board estimates, the November-December period will see an output of 1,97,000 tonne, traders pegged production in these two months even at higher levels. So, prices should have already had a southward movement.

But, spot rubber markets are currently under the influence of futures trading and, hence, the surge in prices.

Meanwhile, as global prices are currently lower than the domestic levels, rubber-based industries "� particularly, the tyre industry "� have planned to import 30,000 tonne rubber during the December-February period.

A section of the traders said the present pricing pattern, coupled with imports, might lead to a drop in prices during February-March.

Rather than placing orders in the domestic markets, the industry can avail of the benefit of Rs 8 a kg by resorting to the advance licence route for imports.

The price difference between global and domestic markets has also badly hit exports from the country. According to traders, exports have almost come to a standstill in November and December.