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Thursday, July 7, 2022

Sheela Thomas: Concerns over global economy behind fall in rubber prices

KOTTAYAM, JAN. 1:

The fluctuations in rubber prices depend mainly on market conditions. Whatever happens in the international market will have a direct bearing on domestic situations prevailing from time to time. Some believe that the Rubber Board will have a decisive role in controlling the domestic market. But it is not so.

The domestic natural rubber (NR) sector was integrated with the international market through various policy decisions from the early 1990s culminating in the lifting of quantitative restrictions in 2001. The main factors impacting international rubber prices such as global supply/demand position, crude oil price movements and the consequent impact on prices of synthetic substitutes, exchange variations of currencies of major exporters etc weigh on the domestic NR market as well.

Sheela Thomas, Chairman, Rubber Board, analyses the reasons for the price fall since the second quarter of 2011. Excerpts from the interview:

What is your forecast regarding domestic production and consumption of NR in the current fiscal?

Production and consumption of NR this year are estimated to be 9,30,000 tonnes and 10,60,000 tonnes respectively, indicating a deficit of 76,000 tonnes.

How will the deficit affect the industry?

The deficit is not expected to affect the industry in any way. The opening stock of rubber on April 1, 2012 was 2,36,275 tonnes. In addition, manufacturers have an opportunity to import more than 1,25,000 tonnes through duty-free channels. Considerable amount of rubber has also been imported so far.

What is your opinion of the current fall in prices?

Over the last so many years, domestic NR prices have been moving in tandem with the international prices. Prices in the international market have been seeing a downtrend since the second quarter of 2011. The trend is mainly a result of the growing concerns about world economy, particularly in the light of the debt crises in the Euro zone. There is a fall in import demand from China and piling up of inventory in Qingdao Free Trade Zone. The corrections in crude oil prices also had a negative impact on the market.

What is the current domestic scenario?

October to January is the peak production period in India. This year’s peak production period has witnessed a surge in import of NR also. More than 41,000 tonnes of NR was imported during October-November. This is 67 per cent higher than the import during the same period last year. Total import during April-November 2012 is nearly 1,54,000 tonnes.

There was also a 27 per cent decline in the purchase of major tyre companies in November compared with the previous month.

This has been mainly because of the increased availability due to import.

There has also been a four per cent fall in consumption in November compared with November 2011.

Do you foresee a recovery in price?

Attempting a forecast about prices in the near future would be difficult as it primarily depends on the movements in global economy.

Crude oil prices, currency exchange fluctuations and weather factors also play a role in rubber production, consumption and price.

Most of these factors are volatile. The world economy is in a phase of slow recovery, though with several downside risks.

The projected world GDP growth for 2013 is 3.3 per cent and that of China is 8.2 per cent. Replanting rate is expected to be higher in the coming years and so oversupply is not likely.

These are expected to be positive factors in sustaining demand and prices in the coming years.

Do you have any research programme to reduce long gestation period of rubber so as to realise an early farm income?

The extent of gestation period of rubber is mainly dependent on colonal characteristics, type and quality of planting materials used, soil and environmental factors, agro management practices and biotic and abiotic stresses.

We have been conducting research in all these areas.

Effect of agricultural practices such as irrigation, enhanced nutrient application through chemical fertilisers and organic manure, selective manuring, conservation of oriented tillage followed by heavy mulching etc. in reducing immaturity period is being studied.

ADAPTING GOOD AGRICULTURAL PRACTICES

Earlier studies had shown that spilt application of fertilisers also contributed to higher growth rate.

The effect of conservation pits (silt pits) on enhancing growth is already known.

A recent trial has shown that by adopting good agricultural practices in an integrated manner, 72 per cent of trees achieved tappability in five years and nine months compared to the normal gestation period of seven years in Kerala. As regards clonal characteristics, it is seen that the newly released clones in the RRII 400 series have higher growth rates compared to the other currently popular ones.

Higher growth and resultant potential for early maturity are qualities we look for in our ongoing breeding programmes also.

SOurce:L Business Line

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