Prices hit 6-year high on upturn in consumption
As the world awaits a recovery from Covid-19, the natural rubber prospects are looking up with an upturn in demand and prices towards the end of 2020.
The demand and prices were ruling low as the lockdown brought the industry to a complete halt in the early part of this year.
NR price was hovering in the range of ₹135/kg in February end and it fell to ₹125 when lockdown started.
When markets opened after lockdown, prices plunged to ₹116 per kg. However, domestic prices rose in tandem with international prices from the end of July triggered by a growing consumption. The prices crossed ₹160 per kg in the first week of December, a level untouched since 2014.
Santosh Kumar, Executive Director (Rubber operations), Harisons Malayalam Ltd, pointed out that the demand for latex in making gloves and protective devices for medical uses picked up during the lockdown period as imports from South-East Asian nations failed to meet the requirements.
This paved the way for a recovery in rubber prices, facilitating industries to resume production.
Though the prevailing buoyant price trends paint a rosy picture, KN Raghavan, Executive Director, Rubber Board, maintained that it was too early to say whether the prices would hold firm in the long run.
Farmers presently have reasons to cheer but they should not forget the hard lessons learnt about the need for improving productivity and quality and bringing down the cost of production.
According to George Valy, President of Indian Rubber Dealers’ Federation, the hike in ocean freight rates and the delay in the arrivals of shipments forced companies to source raw material from the domestic market.
The early economic recovery of China after the lockdown, the impact of Covid in other producing countries and the surge in international prices have all boosted NR demand in the domestic market.
“We are just entering the production season in December-January and the current price realisation will be beneficial to farmers,” he said. “Until and unless there is a correction in the international market, the domestic price may continue above ₹150 level,” he added.
Rubber Board figures show that production from January to October was 5,02,000 tonnes against 5,34,000 tonnes in the corresponding period of 2019. This shortfall was essentially on account of the fall in production during the period from April-June 2020, when it fell to 82,000 tonnes (1,23,000 tonnes). Consumption declined to 8,21,960 tonnes (9,46,120 tonnes) as lockdown forced a contraction in the April-June period to 1,41,460 tonnes from 2,94,620 tonnes in the same span of 2019.
The imports from January to October was 3,06,582 tonnes (4,19,895 tonnes), while exports were at 6,865 tonnes (7,155 tonnes).
Rubber occupies the second largest area under cultivation after coconut with 21 per cent of gross cropped area in Kerala. Extreme fluctuations in weather – oscillating from severe drought to severe floods in the past two years wreaked havoc in its cultivation. The problems have further worsened in 2019-20 due to increase in production cost and lower price realisation. The financial unviability of rubber farming had even forced growers to leave nearly 30 per cent area untapped.