Rubber prices to move with a negative bias
Natural rubber prices have been taking cues from the monsoon and the crude oil price movement in the past few months. As tapping gets resumed after monsoon, the fundamentals look weak for the commodity for the next few weeks.
In January, rubber prices were trading high around Rs 165 per kg. In March, prices were at Rs 145 per kg. Prices have been coming down as the macro economic factors affecting the global money market had a bearing on the rubber market too.
Prices had come down to Rs 120 per kg by mid-June, said Hareesh V, head of commodity research, Geofin Comtrade. From there, rubber saw some recovery to Rs 131 per kg as the monsoon halted tapping activities in rubber-growing parts of Kerala. But reports about higher stock levels in China and the weakness in crude prices saw prices correcting to Rs 127 per kg last week.
Despite being on the lower side, Indian rubber prices are trading above the international rates, reversing the trend in the initial months of the year. In March, Indian rubber prices were Rs 26 per kg higher than that in Bangkok. Last week, Indian prices were Rs 26 per kg higher than Tokyo Commodity Exchange (TOCOM) prices, mainly due to the monsoon effects on the rubber market. In the international market, the crude oil price movement has been one of the main factors affecting the market. In the first week of June, prices were trading at 178 yen in TOCOM. It went up to 206 yen and has come down to 195 yen.
In the Indian market, rubber prices have remained above Rs 100 per kg since the beginning of the year despite the fluctuations. The market has seen prices in earlier years going well below the Rs 100 per kg mark. This has seen rubber production remaining higher during the past months.
Between January and May this year, rubber production has gone up by about 70,000 tonnes to 276,000 tonnes against from 207,000 tonnes during the same period last year, which is a rise of 33 per cent. During April-May itself production rose by 15.3 per cent, while consumption moved up marginally by three per cent.
Till May, the imports have been lower as the Indian prices were ruling higher than the international market rates. However, now that the trend has reversed, the chances of imports going up are higher.

According to Hareesh, rubber prices may move within Rs 120-Rs 140 per kg range with a negative bias for the next few months. “The fundamentals are weak for rubber. The supply should go up after the monsoon as tapping gets resumed. However, the consumption – both in the domestic market and the international market – are expected to remain subdued. Higher imports will further pull down procurement by domestic tyre manufacturers,” he said.
Rubber tree (hevea brasiliensis) is a quick growing tall tree acquiring 20-30 metre height. It begins to yield latex in 5-7 years after planting and requires hot and humid climate with temperature of 25°-35°C and annual rainfall of over 200 cm. The rainfall should be well distributed throughout the year.
India is the third largest natural rubber producing country of the world, next to Thailand and Indonesia, producing about 9 per cent of the global output. From about 200 hectares in 1902-03, the total area under rubber plantations increased to about 590,000 hectares in 2003-04.
Kerala is the largest producer of natural rubber producing 92 per cent of total rubber production of India, with Kottayam, Kollam, Ernakulam, Kozhikode districts producing practically all the rubber of this state. Tamil Nadu is the second largest producer but accounts for just 3.39 per cent of the total production.
Sangeetha G.