Rubber to move up on increase in exports

Rubber prices in the spot and futures markets are likely to move up modestly next week due to rise in exports. Overseas sale of rubber rose on low domestic prices, which are Rs 15 a kg less than global prices.

Sellers are likely to hold back stocks expecting further rise in exports, they said.

Rubber exports that were languishing at lower levels in the first half of the current financial year gathered momentum in December-January due to firming up in international markets compared with domestic rates.

Rubber Board has also upped export projections to 35,000 tonnes in 2007-08 (April-March) from earlier estimate of 24,000 tonnes.

According to current indications, exports are likely reach 45,000-50,000 tonnes by end of March. However, most dealers said prices in the spot market are unlikely to show any sharp uptrend due to high level of carryover stocks.

Carryover stocks of 225,000 as on January 31 will keep supply at comfortable levels despite rise in exports, a dealer said. Rise in exports has failed to make a major impact on domestic price so far due to high level of stocks, he said.

Intermittent rains in Kerala, accounting for around 90 per cent natural rubber output in the country, will also keep production at high levels in February considered as the beginning of lean season for rubber output, he said.

Buyers are also likely to maintain a cautious approach by keeping purchases to a limited scale, he said.

According to present indications, benchmark RSS-4 grade may stay at Rs 95-97 a kg, said N Radhakrishnan, president, Cochin Rubber Merchants' Association.

Further rise will depend on the situation in Asian markets such as Tokyo and Bangkok, he said.

"If prices flare up further in Tokyo and Bangkok, the commodity may move up here also," he said.

Gap between domestic and international prices has reached Rs 15.22 a kg as RSS-3 grade rose to Rs 109.22 in Bangkok on Wednesday compared with Rs 94 for its equivalent RSS-4 grade here.

RSS-3 grade in Bangkok gained 2 per cent to Rs 109.22 from a week ago.

RSS-4 grade in Kottayam spot market stayed flat at Rs 94 Monday compared with a week ago.

NMCE rubber futures made modest gains as March contract rose to Rs 9,750 a quintal on Wednesday from to Rs 9,672 last week.