The natural rubber (NR) mart across the globe is now in a correction mode due to increased production. Both, the domestic and international prices of the commodity have fallen in the current week owing to fresh developments in production and supply of the commodity.
The unusual rainfall in the main producing areas of Kerala has brought in a slight correction in prices as production has gathered momentum. The price of benchmark grade RSS-4 fell Rs 4 a kg compared to last week’s price. In spot trading on Thursday in Kochi market, price was Rs 233 a kg which was Rs 237.50, a week back. A month back, Kochi market quoted Rs 243, since production was low due to summer heat.
A majority of plantations had stopped tapping then and this resulted in a serious supply crunch in the local market.
The abnormal heavy rainfall has now caused a fresh start of tapping and the much higher prices forced growers to re-start tapping well in advance of monsoon.
According to ANRPC (Association of Natural Rubber Producing Countries) after two successive months of decline, China’s import turned positive this March by clocking 1.4 per cent year-to-year growth to 297,000 tonnes.
The Chinese government anticipates a sharp increase in import demand this month. However, the global market had showed signs of correction beginning from the last week of April largely on concerns about the global economy, Japanese Yen appreciation and a marginal drop in crude oil prices. Price for RSS-4 grade in Bangkok market has slipped to Rs 243 a kg as on Wednesday. A month back the market recorded Rs 258 a kg.
Market sources expect that if monsoon would be normal and arrives at the right time, local production would sharply increase, leading to further fall in prices.
The second busiest production season of natural rubber in Kerala is June-August. ANRPC estimates indicate global NR supply is expected to ease in the coming weeks as farmers resume tapping due to widespread rainfall in major producing countries like Thailand, Indonesia and Malaysia.
Total supply from the ANRPC member countries is expected to reach 651,000 tonnes in April and 753,000 tonnes in May. In March, the production stood at 580,000 tonnes only. In April-June (Q2), the total global supply is likely to increase 10.5 per cent at 2.3 million tonnes as against 2.08 million tones in the same period last year.
