Thai meet to discuss rubber futures

KOCHI: A crucial session on futures trade in rubber at the World Rubber Summit and the International Rubber Study Group (IRSG) 43rd Assembly of Nations to be held at Bangkok from May 14 to 18 is expected to provide important pointers for policy in the Indian context on futures trade in this plantation-based commodity.

The IRSG is taking up the topic of futures trade in rubber for discussion as per the request of Sajen Peter, chairman, Rubber Board. As the chairman of the Economic Committee of the rubber study group, Mr Peter had requested IRSG to study the issue.

He had also said in a couple of meetings that the Rubber Board’s view on futures trade in rubber would be finalised after IRSG has studied the issue. The allegations that manipulation is rampant in rubber futures trade and that rubber prices, in both spot and futures market, are controlled by a group of speculators had rocked the rubber industry.

As a result, while some industry level organisations like Automotive Tyre Manufacturers Association (ATMA) asked for a ban on futures trade in natural rubber, others like the Cochin Rubber Merchants’ Association had asked the government to look into the allegations over manipulation of prices.

Futures trade came under attack after the rubber prices saw an unusual rise in December 2006 to January 2007 at a time of peak production period. The board had then taken the view that the stakeholders in the sector should be given more participation and said that the Rubber Act necessitates a licence for “dealing in natural rubber”.

When the issue was taken up for further discussion, Mr Peter had maintained that a final view would emerge only after the IRSG study. The Rubber Board chief would be attending the 4-day long summit. IRSG would take up the topic “Futures market and natural rubber prices” for discussion in its 5th Session.

Three important aspects that would be covered are: “Futures role in manipulating spot market price”, “Speculative flows — the impact of managed money on natural rubber price formation” and “Natural rubber development from a trader’s perspective”.