It is raining ample supply concerns in rubber, as early morning rains are slowing down latex-tapping in plantations. Despite ATMA’s (Automative Tyre Manufacturers’ Association) warning about taking the imports-path, rains have marginally stretched the spot prices of RSS-4 on a taut band from Rs 86 per kilo to Rs 88 per kilo this week.
Rainfall in Kerala, which accounts for 85% of country’s rubber output, has been the highest in the last 17 years, according to Meteorological sources. Tapping is usually a dawn job and early morning downpour is a key feature of the current spell of monsoon, N Santhosh, director, Met Centre, Thiruvananthapuram, told FE.
In Idukky and Kottayam districts, rainfall levels are up by 25% and 20% respectively. This would mean that Bordeu mix spraying (against rubber-tree diseases) is also likely to be hit. The Rubber Board had been counting on at least 80,000 tonne output this month to make good the huge deficit in the last few months.
During April-August, production had fallen by 50,000 tonne as the workforce was down with viral fever. However, the board?s official claim is that ?compared to 60,000 tonne closing stocks in July 2006, in July 2007, stocks closed at one lakh tonne.? Trader sources said that the farm-to-market movement from north and central Kerala are still weak. Rains have, however, spared plantations in the South. Less than 1,500 tonne were traded last week.
Rubber futures, meanwhile, remained firm. On NCME, rubber for October delivery last traded at Rs 87.30 per kilo, surging by 2.58%.
Although the Rubber Board had last week demanded that the intra-day price volatility should be plugged to 2% from the present ceiling of 4%, Forward Markets Commission is yet to take any heed of this directive.For all its bravado about imports, the tyre industry is hardly in any hurry to take the import plunge, as the international price indices are not too encouraging. Equally deterring is the 20% customs duty.