Strong overseas demand drives rubber prices up

KOLKATA: Domestic rubber has had no better time than what it has gone through so far in the current year.
Driven by a strong demand for natural rubber from across the globe and the resultant bullish trend in global prices, exports from India have spurted to 28,446 tonnes till the third week of July this year.

This is a remarkable achievement, considering rubber exports during April-July last year were 3,468 tonnes. The current upsurge in has, no doubt, come as a great boon for lakh of small growers who dominate rubber plantations in the country.

Almost 90% of about 11 lakh rubber planters are small farmers, with an average land holding of 0.5 hectares. Lured by an additional Rs 20 per kg of rubber in international markets, many of them took active interest in exports this time around. Others who were not directly involved in exports benefited from a 10% rise in its prices in the domestic market.

Hectic activity in exports has been seen, particularly among small farmers in Kerala who, encouraged by the state government, have formed producers societies to venture into the global market. Kerala being the largest producer of natural rubber in the country, contributes nearly 90% to total rubber production.

Judging by the current performance, it is expected rubber exports in ‘06-07 would exceed last year’s figure of 73,830 tonnes. Even if the domestic and international price differential falls below Rs 20 per kg, rubber exports are bound to rise this year on the back of higher production in the current year.

Production is expected to touch 8.3 lakh tonnes, as against 7.1 lakh tonnes last year, said a senior Rubber Board official. Higher offtake of Indian rubber in the global market has prompted the Rubber Board to ask deep-pocket exporters to put more thrust on boosting exports of worldclass graded rubber sheets during the 11th Plan Period.

As part of this effort, the board has launched a major awareness campaign among rubber producer societies to increase production of top-quality rubber sheets, at par with RSS-1 grade in the international market.

With international prices staying Rs 15-20 per kg higher than domestic prices in the past three months, rubber imports have expectedly come down. So far, 19,523 tonnes of rubber have been imported, against 27,527 tonnes during the entire period of April-July last year.

Strong demand for natural rubber — especially from the Asia Pacific — rise in oil prices and decline in Thailand’s rubber production led to a bullish trend in rubber prices since September last year.

This had sent RSS-3 and RSS-4 grade of rubber prices rising by 90% in the global market in April-July this year. Though domestic prices of its equivalent grades (RSS-4 and RSS-5) also increased in step with the international trend, it stayed Rs 15-20 per kg lower than global prices during the period.