Natural Rubber prices surge at tail end of peak season

In the tail end of the peak season of latex harvesting, market has witnessed a long-due price rise for domestic NR (natural rubber). From Rs 120 per kg in the first week of November, the price of premium grade RSS-4 has crossed Rs 137 per kg this week, and expected to touch Rs 150 per kg by month-end.

The bullish trend for NR is likely to stay for a couple of months, according to KN Raghavan, executive director, Rubber Board of India, Financial Express reports. Usually, in the peak-production season (October to January), Indian NR price shows tendencies of downslide. The board evaluates the outbreak of Pestalotiopsis disease in rubber plantations in top three NR producing countries like Thailand, Indonesia and Malaysia and the subsequent fall in international supply as one of the top factors in jacking up the demand of domestic NR.

According to the Association of Natural Rubber Producing Countries, global NR production in January-July 2019 fell 7.3% (year on year) to 7.04 million tonnes.

Meanwhile, rubber futures are also on a green patch. On Indian Commodity Exchange, the most active February contract ended at Rs 14,245 per 100 kg this week, up 1.7 per cent from the previous level.

Earlier, Rubber Board had rolled up the production, consumption and import targets for NR in the current fiscal year, in the wake of the growing vagaries in the global and domestic economy. The projection for production in 2019-20 was revised to 7,30,000 tonnes, trimming as much as 20,000 tonnes from the earlier target.

The new consumption target for the year is 11,40,000 tonnes, as against 12,70,000 tonnes earlier. Because of rains in November and December, the peak season started late and there is yet to be enough stock movement from plantations. Since 30% of the plantations have been left untapped for the large part of the peak season, the domestic producers may not have enough stocks to feast on the unexpected price high.

Shekhar Ghosh is a communications consultant and and former journalist, who has edited and written for publications such as like Business India, Business Standard, Business Today and Outlook.

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