Rubber prices in Kerala, India’s rubber hub continued its southern journey ever since the government announced plans to import 40,000 tons of rubber.

As of Wednesday, price of 100 kilogram of high grade RSS4 rubber dropped by Rs 50 to Rs 20,950 while RSS 5 grade rubber also dropped by Rs 50 TO Rs 20,750 per 100 kilogram in major markets at here and Kottayam.

In the Tokyo Commodity Exchange, the most active August contract closed the day trade Thursday at 382.9 yen per kilogram.

The price drop could even threaten the State’s economy as nearly 1.2 million rubber farmers in the state, of which 92 percent are small time farmers, who earned a living by cultivating this wonderful tree.

Analysts said farmers are struggling to meet both ends as the prices are already dropped due to higher first quarter production of nearly 1.75 lakh tonnes, up by by 5.4 percent.

Kerala is on the verge of production peak starting next month and the expected higher output will surely bring down prices again, added analysts.

Big scale farmers can keep the output for better times but majority of small scale farmers cannot afford to have such luxuries, they said.

Analysts also said a recent rate hike by Reserve Bank of India will also likely to affect the prices negatively as auto laons could become more expensive and might dip vehicle sales.

They added that any drop in vehicle sales will impact the tyre industry, which accounts for 65 per cent of natural Rubber demand in the country.

India announced plans to import 40,000 tonnes of natural rubber to tide over production shortfall and has reduced the import duty from 20 percent to 7.5 percent.

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