Rubber prices rise in tandem with Tocom

Mirroring a rise in rubber futures for the fourth day on the Tocom, the commodity exchange in Tokyo that sets the global trend, domestic prices increased in the natural rubber market, especially during the production season.

After a gap of almost four weeks, the spot price of benchmark grade RSS-4 today crossed the Rs 90-mark to touch Rs 91 a kg from Rs 89 last Saturday.

The market is poised for a bull run even as the monsoon is weeks away and the main production season (October-December) is yet to start.

This volatility has flummoxed the 4,000-plus dealers and more than 1 million farmers across the country.

In November-December 2006, the prices had touched Rs 102 even though there had been a steep rise in production. About 40-45 per cent of the total annual production takes place between October and December.

During the off-season (February-April), the market had moved in a price band of Rs 84-95 and finally ended at Rs 84. The high volatility is affecting farmers to release stock in the market. The stock position on March 31 was 162,000 tonnes, with farmers anticipating a rise in prices during the off-season.

But the market moved contrary to expectations and the supply was not affected during the off-season.

Market sources expect monthly production to touch 45,000-50,000 in June-July. But stakeholders are still worried about the market's abnormal behaviour as it reacted in line with the price rise in Tocom. Tokyo May futures quoted at Rs 97.60 a kg and Rs 97.80 for June.

Rubber for delivery in October rose 2.7 yen, or 0.9 per cent, to 292.0 yen ($2.41) per kilogram as the Tokyo Commodity Exchange close. The contract gained 5.4 percent last week, the biggest weekly rally since March 23.