Commodity Online
KOTTAYAM: As predicted by a section of the trading community the ban on rubber futures did not lead to lowering of rubber prices but it bounced back to Rs 120 levels.
Traders said that global rubber prices touched Rs 127.04 per kg. Market sources were of the view that the tight supply situation prevailing in the market was the main reason for the price rise.
Traders said the prices are likely to remain bullish in the short run due to rising crude oil prices that will push up prices of synthetic rubber. This in turn will lead to demand for rubber prices rising in relation to supply.
Immediately after the suspension of futures trading in rubber many traders and broking houses had said that there was no justification for suspending rubber futures.
It may be recalled that prices climbed to a level of Rs 119.50 per kg on May 7 but following the announcement of ban on rubber futures, it fell to Rs 116 per kg.
Prices staged a recovery to Rs 118.50 per kg on May 12 and to Rs 119.50 per kg on Wednesday.
Last year ended with production registering a 28,000 tonne fall compared to the previous year. In relation to the domestic consumption, it was lower by 35,000 tonne. In the current year, despite the heavy summer rains the production in April stood at 57,000 tonne. The average monthly production level is around 60,000 tonne.
Rubber Board officials opined that with the increase in prices the growers have been holding on to stocks. It is estimated that around 25-30% of the stocks is with the growers, they added.
At the same time inventory with dealers would be lower as the cost of holding the stock is high.
Confirming the tight supply conditions rubber traders said that supply squeeze will lead to price rise. The higher prices have prompted growers to invest money for rain guarding of trees in many places.
In Tokyo, the benchmark rubber futures advanced to a two-and-a-half-month high on Wednesday after bullish technical signals and concerns over supply tightness in Thailand encouraged strong buying by investment funds.
Physical rubber prices were strong, supported by tight supplies as heavy rains in Thailand, the world’s top producer, has prevented a return to normal output after the end of the wintering dry season, when production falls. Japanese rubber futures were also supported by strength in oil prices and a weaker yen.
