KOCHI (Commodity Online): Crying over rubber market crash? There is still hope for rubber growers to stretch returns in a bearish, oversold market. Sell latex instead of rubber sheets and earn Rs. 27 more and you may as well be contributing to enhanced forex inflows into India.
This is how rubber growers can stretch their returns with latex instead of RSS (ribbed smoke sheets).
Latex contains a maximum dry rubber content of 60% while on an average it could contain 35% while the lowest level could be 20%.
Latex with 60% DRC is priced at Rs. 119.45 per kg (as on Thursday). An average barrel of latex contains 200 kg. If a grower gets 35% DRC content in latex his returns are calculated as follows:
119.45 x 10/6-35 = 164.
Rubber content of the 200 kg barrel is calculated as follows: 200 x 35/100 which gives a rubber content of 70 kg. Therefore, total income per barrel is 70 x 164 = Rs. 11,480. (Assuming 35% dry rubber content only).
The same seventy kilogram converted into rubber sheet (RSS4) will fetch Rs. 10,290 excluding sheet processing cost of Rs. 10 per kg which converts into a net income of Rs 9590.
Therefore, differential return is Rs. 1890 per 70 kg for latex which converts to Rs. 27 per kg. Shelf life for latex mixed with ammonia is one year while Rubber Sheets may last for six months.
Cyriac Mathew, Executive Director of St Mary’s Rubber Pvt Ltd, a leading latex exporting firm, said that said that the prevailing market situation is favourable for latex exports especially with the international latex price ruling above domestic prices. Therefore, selling latex form is highly recommended for farmers as it is more profitable than selling RSS4 sheet.
Rubber latex can be utilised for making gloves, condoms, rubber bands, mats and mattresses and several other industrial products. According to Rubber Board, there are several rubber exporters with modern centrifuge machines for converting latex into exportable quality products for global markets.
It is estimated that 70% of India’s rubber production is in the form of RSS grade which is consumed by tyre industry especially for making radial tyres. However, given the dismal state of automobile demand and in turn demand for tyres, rubber producers may as well add more latex to their portfolio to enhance returns.
Commodity Online
