Rubber, tea estates set to gain from rain, sunshine

C.J. Punnathara

Kochi, June 24

The intermittent rain and sunshine last week augurs a better crop for the rubber and tea plantations of South India, but is likely to dampen the cardamom production. Bouts of rains and sunshine is the ideal weather for rubber plantations since it augments better production as well as enable tapping operations, Mr N Radhakrishnan, former President of the Cochin Rubber Merchants Association, said.

The farmers were already enthused by the high reigning prices and these ideal weather conditions would have provided the final catalyst, Mr Radhakrishnan added. Also, almost 70-75 per cent of the plantations are reported to have undertaken rain-guarding of their trees to ensure that tapping continues unhindered even in the rains. However, arrivals to the markets have thinned out.

Renewed buying

And this had nothing to do with tapping or production but has more to do with speculation and holding back of stocks, sources in the trade said. The thinning arrivals were mainly due to the high prevalent prices which have prompted the farmer to hold back his stocks in anticipation that the price rise might be sustained into the coming days, the sources added. Reports of renewed buying by China from global rubber markets have also propped up the Indian rubber prices.

While international rubber sheet prices had often overtaken Indian prices in the recent past, sources pointed out that Standard Malaysian Rubber (SMR) prices were often reigning lower than the Indian prices. The corresponding domestic grade would be the Indian Standard Natural Rubber (ISNR) which is most often of a lower quality. While SMR is made from pure latex, ISNR is made from crump rubber, which is the residue from the hardened latex.

While the superior SMR prices are quoting in the Malaysian markets at Rs 135 a kg, the inferior ISNR prices are quoting over Rs 150, Mr Radhakrishnan said. This is mainly because of the weak demand for SBR from the developed markets of the West which were its traditional big importers. Most of the Asian markets trade in rubber sheets. Trade sources said that it would be feasible for India to import SMR at the current prices to stem the Indian price rise. However, they conceded that any news of imminent imports into India was likely to trigger price spiral in SMR.

Crop arrivals

Reports indicate that intermittent rains coupled with sunshine have resulted in a flush of new leaves in South Indian tea plantations and the crop arrivals have begun to pick up. And if the favourable weather condition persists, the crop in the coming months is likely to look up.

However, crops such as cardamom require huge amount of water and adequate amount of shade. The intermittent rains reported in several growing regions are reportedly not adequate to recharge the groundwater and ensure a good crop. But, we are only in the early part of the monsoon and consistent rains in the months ahead could very well change the outlook, farmers pointed out.

(thehindubusinessline.com)