Global cues pull natural rubber prices as weak monsoon

Natural rubber prices have declined in the Kottayam market,the trade centre, over the past couple of days largely on global cues and partly due to the unusually weak South­-West monsoon in Kerala. The near absence of rains is helping uninterrupted harvesting. Nearly 70% of India’s natural rubber supply comes from Kerala.

As per the usual pattern, harvesting gets disrupted during the period from June to August every year, due to the continuous south­-west monsoon rains. In sharp contrast to the usual pattern, rains are almost absent or unusually weak since the beginning of June this year. The recent gains in rubber prices should have cheers a section of farmers to reopen untapped trees for tapping and increasing the frequency of harvesting to the extent possible.

The most ­recent Covid renewal and restrictions can further hold back the global demand prospects for natural rubber. Key Asian rubber futures markets have seen large sell offs and prices nose diving over the past three trading days. In the Kottayam market, the price for the benchmark grade RSS4 stood at ₹176.50 per kg against ₹178 between June 10 and 14.

Apart from the Covid restrictions in China, the sell offs in futures are due to the U.S. inflation. The new curbs in China, economic outcomes of the Ukraine war, inflation, prospects of aggressive rate hikes by the Federal Reserve and the dollar’s uptick make notional investments riskier and unattractive.

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