Rubber prices may decline to Rs 85 a kg on output growth

Seasonal factors and weakness in global markets may pull down rubber prices further, dealers said today. The price of benchmark RSS-4 grade rubber may fall to Rs 85 a kg from Rs 89 rupees a kg on Monday, they said.

Rubber prices may remain weak with the beginning of peak domestic production season, said N Radhakrishnan of Cochin Rubber Merchants Association.

"Peak domestic production season gathers momentum from September, with the end of monsoon," he said.

According to Rubber Board, 63 per cent of India's natural rubber production is in August-January, considered to be peak season.

Out of this, nearly 10 per cent of total production is in September alone.

Rubber prices are also under pressure in global markets, with the benchmark RSS-3 grade in Bangkok, equivalent to domestic RSS-4 variety, being traded at Rs 98 a kg on Monday, said another dealer.

Domestic RSS-4 grade rubber price fell 3.7 per cent to Rs 89 rupees a kg on Monday from Rs 92.50 a kg at the beginning of this month.

Domestic rubber futures also witnessed a weak trend, with September futures down to Rs 8,942 per 100 kg on National Multi Commodity Exchange of India on Monday from Rs 9,014 per 100 kg at the beginning of this month.

In Bangkok, rubber prices fell 10.7 per cent to Rs 98.52 a kg on Monday from Rs 110.33 a kg at the beginning of this month.

The Onam festival in Kerala, which falls on September 5, may also weaken rubber prices this week, with a section of growers likely to offload stocks.

Generally, supply tends to rise ahead of this festival, as people need money for celebrations, a dealer said.