Natural rubber prices have plunged to a five-year low at Rs. 138 per kg on concerns of muted demand , oversupply in the global market and plummeting international prices. Industry analysts have predicted a bearish outlook in the coming weeks and say that a change in the situation can happen only with the fresh policies of the new government at the Centre .

The much-trumpeted procurement programme of the Kerala government to lift the prices has petered out after the initial promise due to lack of funds. No rubber procurement has taken place in the state after April 10, the Lok Sabha election day.

"We had to stop it on instructions from the Election Commission. The state government has taken up the matter and we hope the funds will be released in the coming days," said S Ratnakumaran, managing director of The Kerala State Co-operative Rubber Marketing Federation (Rubbermark) the main procurement agency.

The rubber prices were around Rs. 148 per kg when the procurement began in early March and it has now fallen by another Rs. 10.

So far Rubbermark has procured around 110 tonne. The industry doubts, whether the programme aimed at buying rubber at Rs. 2 more than the market rates till the prices touch Rs. 171, will remain as unfulfilled election promise. The international prices of RSS-3 variety have dropped 12 per cent to Rs. 123.51 per kg since April 1.

The block prices have fallen by Rs. 13 to Rs. 102 per kg, which is less than $2 and have triggered more imports. "The demand from China (the largest consumer ) has been weak as the country has sufficient stock and there is an oversupply in the global market. This demand supply mismatch is pulling down the prices and it is reflected on the Indian prices as well," said CP Krishnan, wholetime director of Geojit Comtrade.

According to him, unless the threat of El Nino affecting production cause supply concerns and raise the prices, the downward trend is likely to continue in the international market in the short term. In the present situation, the growers have stopped tapping despite showers in April bringing relief from the hot weather.

"The tappers are asking for Rs. 3 to tap a tree. A person can tap around 300 trees a day which means Rs. 900 wages per day. With the prices at such levels, it would result in loss for the grower," said Biju John, a rubber dealer.

The tyre manufacturers are waiting for the new government to take charge at the centre and formulate fresh policies on infrastructure and mining to rejuvenate the sector. Meanwhile, good performance in the replacement tyre segment and low international prices have prompted more imports. The year 2013-14 saw record imports of 3,24,467 tonne.

Source:- economictimes.indiatimes.com