Commodity Online KOCHI: Rumours are rife in the industry over the Centre’s move to extend the ban on Futures in natural rubber by a few months more, fueling speculation that the prices may suffer due to the government’s decision.
However, the trading and broking community is not happy with the move. This week rumours spread like wild fire that the government will direct the Forward Markets Commission (FMC) to extend the ban on rubber futures for a further 3-4 months.
The Centre’s step comes in the wake of rising spot prices of the commodity and the soaring inflation causing much woes for the government, which is heading for an election soon.
Worried over the rising prices, the tyre manufacturers are strongly in favour of extending the ban.
However, the rumours had an impact on the spot prices this week with the market witnessing an average fall of Rs 2 per kg in spot rubber.
The benchmark grade RSS–4 prices fell by Rs 2 to Rs 140 a kg from an all-time high of Rs 142 on Saturday.
Rubber futures, along with chana, soyaoil and potato, were banned for four months on May 7 this year. At
the end of the last week, brokers who were active in the futures market were hoping that suspension would end automatically.
However, the Centre is likely to extend the ban. Another argument is that the government is not against the resumption of Futures trading as the price rise was part of a chain-reaction, which remained even during the suspension period.
On May7, the Kochi market of RSS-4 had closed at Rs 120 a kg. Even without Futures trading, the market had appreciated by Rs 22 a kg in the last 15 weeks.
The natural rubber market is poised for further appreciation as there is heavy demand for the commodity all over the world.
Meanwhile, the National Multi Commodity Exchange (NMCE) has already submitted the application to commence fresh contracts and other exchanges will follow suit.
FMC may take some time to process the applications.
In another development, small traders have expressed fear that if the Futures are introduced again, the prices will shoot up causing much woes.
Some experts argued that if Futures are resumed, the growers will benefit as the international prices are still up.
