RUBBER - STRETCHING & MOVING ON THE WAY AHEAD Part 1

Hello Friends here we come up with another write up on “Commodity Corner Series”.

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Topic is RUBBER ………… “STRETCHING & MOVING ON THE WAY AHEAD”

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RUBBER - STRETCHING & MOVING ON THE WAY AHEAD

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We would touch upon aspects like the investment scenario of rubber in India and price movement of the rubber in Indian market.

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We would also read about the gap in the demand and supply of the rubber in the market.

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– Rubber is springy & has the potential energy of getting stretched. These properties are also seen in the price movement of the prices. The year 2009, has given stretchable & phenomenal return on investing in rubber futures.

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INDIAN SCENARIO :

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The four-month period between October and January is the peak season of rubber output in the country. The total area of plantations in the country is 662,000 hectares of which 92-93 per cent is in Kerala. Tripura is the second-largest rubber planting state in India after Kerala.

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DEMAND & SUPPLY GAP –Walkthrough 2009:

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As we know that profit increases when the difference or the gap between the cost price & the selling price increases. This immense gap was witnessed in rubber prices. Tight supply & tracking the rise in Asian markets like Tokyo and Singapore gave momentum to the prices to rise through out the year.

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The Indian industry consumed 356,400 tonnes of natural rubber (58 per cent of the total domestic consumption) during April-November. In April-November, natural rubber production in India dropped 6.5 per cent at 538,125 tonnes against an increase of 3.5 per cent in consumption at 614,600 tonnes. So there was a gap of 76,475 tonnes in production and consumption.

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– PRICE MOVEMENT “Focus on the journey, not the destination”:

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The spot prices at the benchmark Kochi had begun its journey at Rs.67.23/Kg & touched the high of Rs. 139.19 within a year. Strong appreciation in prices in all major global markets which touched Rs 130.48 per kg, made the domestic market bullish.

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Similarly, the futures at MCX posted a gain of 78.94% as of 22nd December, 2009. This spike was also supported by the increased gap between production & supply.

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– Next Blog we would read about the impact of the shortage of rubber industry on major industries and the scenario of the rubber production in other countries. Stay Tuned for more on this.

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