Local rubber growers and tappers in India are optimistic this tapping season despite falling domestic prices as production is forecasted to increase and export options open up.
“The season for tapping latex was to wind up in February. But because of summer rains and the increased rubber inventory-building of tyre firms, tapping season has extended to March,” says Sibi Monipally, general secretary of Indian Rubber Growers’ Association.
Rubber Board of India had forecast an increase in production by 16% in the current season compared to the production season in the previous fiscal year.
Even though the domestic price of RSS-4, the premium grade sheet, has fallen 6% in the last one month, a gap in international and domestic prices has opened up a healthy export option for local growers.
When the international price is Rs160 per kg, the domestic price has been staying around Rs150 per kg. Manimalayar Rubbers, an export firm in India, has already taken advantage of this by exporting rubber products to Brazil, the homeland of the commodity.
Export possibility has given a psychological edge to the farmers over domestic buyers. The growers have already started switching to other crops in view of poor price realisation. In the first three months of 2017, as much as 12,000 tonnes have been exported, according to Rubber Board data.
Tyre companies, which had been leaning heavily on imports, are now wary of international prices. Dropping the import plans, they are now building warehouse facilities near the rubber production centres in Kerala. Rubber production is envisaged to touch 6.54 tonnes this fiscal year.
The Association of Natural Rubber Producing Countries (ANRPC), in its latest report, had hinted that the erratic rubber sheet supply from Thailand, world’s biggest producer, could keep the international price volatile. Secondly, as the oil prices go south, following US buildup of crude inventories, the price of synthetic rubber has also been falling. This could mean that the rubber price would surge in the international market, after March.