Large stock, high imports hit spot rubber

Bearish sentiment prevailed in the natural rubber spot market, with the prices dropping by Rs 4 a kg in a week. Huge stock, heavy imports and declining prices on the Tokyo Commodity Exchange (Tocom) led to the price of RSS-4 falling to Rs 76 a kg today from Rs 80 on June 20.

Market experts were confident of a strong support level at Rs 80. Their forecast has, however, gone wrong in the last one week.

During the last five months, the price of RSS-4 has dropped by Rs 24 a kg from Rs 100 it had hit on January 27 "� the second time in the history of rubber trading in the country for the price to touch the Rs 100 mark. Exactly a year ago, the natural rubber market had recorded the highest-ever rate of Rs 107 a kg for the RSS-4 sheet grade.

Leading local traders feel that most of the market parameters do not favour a rise in the tags in the current season.

Although the monsoon has affected tapping, the overall stock is one of the highest in the last few years.

According to traders' estimates, the total stock for the current month is 130,000 tonnes and rains are not expected to cause any supply crunch. The June output is also expected to rise by around 5,000 tonnes to 56,000 tonnes.

Growers have been stocking rubber for the lean season, expecting a rise in prices. The Rubber Board had warned them against stocking and they seem to be badly hit with the declining prices.

Imports too rose in 2006-07 following low global prices.

The country's imports increased to 85,048 tonnes in FY07 compared with 45,285 tonnes last year. Meanwhile, exports fell from 73,830 tonnes to 55,309 tonnes during the same period, leading to a huge stockpile.