The bullish trend in natural rubber prices could continue at least till April due to the tight supply situation. Until April, a further tightness in supply will be seen due to the seasonal wintering of trees. However, from May until the year-end, supply would be back to normal, provided there are no major calamities. During wintering, production of natural rubber is known to fall.
The NR supply is expected to increase, but at a rate lower than five per cent this year. Even this is on the assumption that the weather will be normal and uprooting of aged trees will be low. Production by the ANRPC countries is expected to increase to a maximum of 9.87 million tonnes (mt), up 4.8 per cent from last year. This is in the event that the annual uprooting of rubber trees is at two per cent of the total area under cultivation.
Due to low re-planting in 2004, only 0.233 million hectares that is equivalent to 3.3 per cent of the yielding area last year, will be available for tapping this year. Moreover, high prices have prompted growers to retain aged trees, postponing replanting in the last two years. Over-aged trees and a further decline in yield may sometimes prompt farmers to uproot the trees in 2011.
In November last year, trees on 16,000 hectares were lost due to heavy winds and floods in Thailand. However, the yielding area expanded as growers tapped dormant trees last year. But the possibility of bringing more areas with dormant trees into production is limited. Rising labour costs and the possibility of changes in prices could prompt growers to keep the trees idle.
The improvement in average yield would be marginal as growers have already exploited their available short-term means on the heels of high prices. The existing yielding area is dominated by trees planted in the 1980s and the productivity of these trees would have dropped drastically on account of ageing.
There could be possible damage to yield potential due to unscientific over-exploitation of trees prompted by high prices. Abnormally high prices have made retaining low-yielding aged trees economically viable. For example, if the price of rubber was US $2 in 2007 and the yield of a 30-year-old tree was 1,100 kg a hectare, a grower would have got $2,200. This year, even if the yield are to drop to 500 tonnes and at around US $5 a kg, the grower would only get a return of $2,500.
Besides this, production in non-traditional regions where productivity potential is lower is also a concern. This is because growers in these regions do not have adequate experience in the required skills and the agro-climatic factors are also not very favourable.
Asian physical NR prices were high towards the end of the 3rd week of January, 2011 as futures prices on the Shanghai market hit a record high, with supply remaining thin from leading NR producers, according to reports (image).
The rubber price in Thailand, the world's largest exporter, reached a record of 172.80 baht (US$5.65) per kilogram on 20th January. Demand for NR has grown based on rising car sales led by China and India. Supply may also lag behind demand as Thai production, disturbed by heavy rain last year, drops further as growers tend to avoid tapping during the wintering season that begins in February, reducing latex output.
Rubber production in Thailand during the season, which runs until May, normally shrinks
by 45 percent to 60 percent from peak production. The low-production period also occurs at the same time in northern Indonesia and Malaysia, lowering output.
According to reports, buyers are still in the market despite high prices to secure the commodity amid increasing supply concerns. Futures also gained amid speculation that buyers in China, the largest consumer, may boost purchases to replenish reserves before the Lunar New Year holiday. The week-long holiday starts from 2nd February.
Natural-rubber inventories in China declined 175 tons to 68,675 tons, based on a survey of 10 warehouses, according to the Shanghai Futures Exchange, which is about 55 percent lower than last year's peak of 151,832 tons.
China's economy expanded 10.3 percent in 2010 to $6.04 trillion, the fastest pace in three years, which compares with 9.2 percent in 2009. China's vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to forecasts by the China Association of Automobile Manufacturers.
The unprecedented upswing in NR prices seen at the Colombo Auctions also, breaking all recent records, should be watched with caution by the producers and consumers alike for contrasting reasons.
(Daily Mirror, Sri Lanka, January 28, 2011)
Thursday, January 27, 2011
Global Natural Rubber Prices To Remain Firm
Harrisons Malayalam scouting Africa for new rubber plantations
KOCHI (Commodity Online) : With current rubber plantations in India maturing or getting old, Harrisons Malayalam, India’s largest rubber plantation and top producer of natural rubber is scouting Ethiopia, Cameroon, Ghana and Indonesia for acquiring fresh plantations.
Besides, HM have plans for India’s North Eastern state of Tripura, where the conditions have been proven to be ideal for rubber plantations.
The company already owns 7000 ha in plantations but is producing only half of its total annual capacity of 10,000 tons, reported The Financial Express.
HM may opt for a JV or leasing of land to the tune of 10,000 ha, as demand from tyre, latex, sports good and glove manufacturers surge.
Natural rubber deficit in India is expected to surge to 5,00,000 tons by 2015 as against the current 1.5 lakh tons. The company expects the prices of rubber to stay above Rs.200 levels.
It intends to plant RR11 400, 429, 430 in the proposed plantations besides carrying out re-plantation of RR11400 series that would provide 25% additional yield.
Back in 2010, the India government had announced it would spare no efforts in helping companies and corporations to acquire land in countries like Africa for plantation and farming purposes.
Rubber Demand to Grow 4.6% in 2011, Outpace Supply, Group Says
Natural rubber demand may grow 4.6 percent this year, boosted by strong vehicle sales, with consumption continuing to outpace supply in coming years, according to the International Rubber Study Group.
Global consumption may gain to 11.2 million metric tons in 2011 and 11.6 million tons next year, said Stephen Evans, the group’s secretary general. The supply deficit will support prices of the commodity used to make tires and gloves, he said.
Rubber gained to a record this week, extending a 50 percent advance in 2010, as rising car sales led by China and India boost demand, and rains disrupted tapping in key growing nations ofSoutheast Asia. Natural rubber demand in China, the biggest consumer, may rise 9 percent this year, said the Association of Natural Rubber Producing Countries.
“From the fundamental point of view, we don’t see relief coming in the next few years because of over-demand and undersupply,” said Evans. “The price is likely to stay firm,” he said.
Demand may rise further to 13.1 million tons in 2015 and 15.4 million tons in 2020, while production may be about 13.8 million tons, said Evans. The estimates are based on normal production conditions, excluding a potential increase in supply from new plantings and increased tapping driven by high prices, he said.
Above-average rain from a La Nina weather event has curbed output in Indonesia, Malaysiaand Thailand, the biggest producer. The weather pattern may last until the middle of the year, causing higher-than-usual rainfall in Thailand during January to April, the Thai Meteorological Department has said.
Further Tightness
“If the demand stays strong, we’ll see further tightness in the market,” Evans said. Still, it isn’t “worrisome, as high prices will encourage tappers,” he said.
The most-active contract on the Tokyo Commodity Exchange gained as much as 3.2 percent today to 474.8 yen per kilogram ($5,725 a ton).
Futures fell 4.6 percent in the past two days after reaching a record 484.9 yen on Jan. 24 on worries China may take additional steps to curb inflation, reducing demand. China raisedinterest rates twice in the fourth quarter in a bid to choke off inflation.
“In the fast-moving economy like China, even a significant move may not be enough to slow it down,” Evans said. “There is no fundamental evidence that demand will go off a cliff.”
Natural rubber consumption in China may rise to 3.6 million tons this year and India’s consumption may gain 5.2 percent to 991,000 tons, according to the Association of Natural Rubber Producing Countries.
China Growth
China’s economy grew 10.3 percent in 2010, the fastest pace in three years and up from 9.2 percent a year earlier, the government said this month. China’s vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to a forecast by the China Association of Automobile Manufacturers.
Natural-rubber supply from members of the Association of Natural Rubber Producing Countries, which represent 92 percent of global supply, may expand 4.8 percent this year to about 9.9 million tons, the group said Jan. 25. The forecast is lower than an “optimistic target” by member governments of 7.7 percent growth to 10.2 million tons, it said.
The International Rubber Study Group counts 16 countries plus the European Union as members, according to its website. Thailand and Malaysia, the world’s largest and third-largest producers, are part of the group, while Indonesia, the second- largest grower, is not.
Price Of Rubber Doubled Last Year
T
he price obtained from rubber production has doubled from year 2009 to 2010, according to the Ministry of Plantation Industries.
“The price of one Kg of rubber on average in 2009 was Rs.202.79 but in 2010 it was Rs. 402.75,” Minister of Plantations industries Mahinda Samarasinghe said.
He said rubber production had also increased from 137,000 metric tonnes in 2009 to 150,000 metric tonnes in 2009. In certain instances the price goes up to Rs. 570 or 580, he added.
However the Minister was unclear on the figures of how much loss the industry incurred due to the inclement weather conditions in the past months. He stated that at present demand overrode the necessary supply and expressed his hope that local produce could fulfill the total requirement needed for the production of value added rubber products.
(Daily Mirror, Sri Lanka, January 27, 2011)
Tokyo rubber jumps four percent
Tokyo (january 28, 2011) : key tokyo rubber futures rose nearly 4 percent on thursday as a rally in shanghai rubber futures encouraged investors to buy back the commodity after the market hit a near two-week low the day before on profit-taking. the benchmark rubbercontract on the tokyo commodity exchange for july delivery, which debuted on wednesday, settled at 467.3, up 10.1 yen or 2.2 percent at 457.2 yen. it rose as high as 474.8 yen, up 17.6 yen or 3.8 percent.
the most active rubber contract on the shanghai futures exchange for may deliver closed at 40,550 yuan ($6,162) per tonne on thursday, up from wednesday's 39,280 yuan. the contract rose as high as 40,830 yuan, just below a record high of 41,200 yuan hit on monday. volume stood at 630,734 lots.
Vietnam’s exports up 18 percent in January
(VOV) - The revenue from Vietnam’s exports reached US$6 billion in January, up over 18 percent from the same period last year thanks to higher priced commodities, said the General Statistics Office on January 27.
Rubber exports reached US$337 million, a rise of 46.5 percent in volume and 146 percent in value while oil and gas exports increased by 23.7 percent in volume and 58 percent in value. Fisheries exports also rose by 30 percent in value, reaching US$400 million.
However, even with a modest growth of just over 10 percent, garments were still the country’s biggest currency earner, raking in US$900 million.
Compared to the previous month in 2010, total export turnover decreased by 20 percent due to a global drop in trade during the new year holidays.
Also in January, the turnover of imports was US$7 billion, up 15.5 percent, a drop of US$1 billion and accounting for 16.67 percent of total export turnover.
The foreign invested sector contributed 3.17 billion USD to the country’s total export turnover while importing only US$2.9 billion. Meanwhile, the domestic economic sector contributed US$2.8 billion to exports and imported US$4.1 billion worth of materials.
(Source: http://english.vovnews.vn/Home/Vietnams-exports-up-18-percent-in-January/20111/123482.vov)
Global natural rubber prices to remain firm
The NR supply is expected to increase, but at a rate lower than five per cent this year. Even this is on the assumption that the weather will be normal and uprooting of aged trees will be low. Production by the ANRPC countries is expected to increase to a maximum of 9.87 million tonnes (mt), up 4.8 per cent from last year. This is in the event that the annual uprooting of rubber trees is at two per cent of the total area under cultivation.
Due to low re-planting in 2004, only 0.233 million hectares that is equivalent to 3.3 per cent of the yielding area last year, will be available for tapping this year. Moreover, high prices have prompted growers to retain aged trees, postponing replanting in the last two years. Over-aged trees and a further decline in yield may sometimes prompt farmers to uproot the trees in 2011.
In November last year, trees on 16,000 hectares were lost due to heavy winds and floods in Thailand. However, the yielding area expanded as growers tapped dormant trees last year. But the possibility of bringing more areas with dormant trees into production is limited. Rising labour costs and the possibility of changes in prices could prompt growers to keep the trees idle.
The improvement in average yield would be marginal as growers have already exploited their available short-term means on the heels of high prices. The existing yielding area is dominated by trees planted in the 1980s and the productivity of these trees would have dropped drastically on account of ageing.
There could be possible damage to yield potential due to unscientific over-exploitation of trees prompted by high prices. Abnormally high prices have made retaining low-yielding aged trees economically viable. For example, if the price of rubber was US $2 in 2007 and the yield of a 30-year-old tree was 1,100 kg a hectare, a grower would have got $2,200. This year, even if the yield are to drop to 500 tonnes and at around US $5 a kg, the grower would only get a return of $2,500.
Besides this, production in non-traditional regions where productivity potential is lower is also a concern. This is because growers in these regions do not have adequate experience in the required skills and the agro-climatic factors are also not very favourable.
Asian physical NR prices
Asian physical NR prices were high towards the end of the 3rd week of January, 2011 as futures prices on the Shanghai market hit a record high, with supply remaining thin from leading NR producers, according to reports (Table,1).
The rubber price in Thailand, the world's largest exporter, reached a record of 172.80 baht (US$5.65) per kilogram on 20th January. Demand for NR has grown based on rising car sales led by China and India. Supply may also lag behind demand as Thai production, disturbed by heavy rain last year, drops further as growers tend to avoid tapping during the wintering season that begins in February, reducing latex output.
Rubber production in Thailand during the season, which runs until May, normally shrinks by 45 percent to 60 percent from peak production. The low-production period also occurs at the same time in northern Indonesia and Malaysia, lowering output.
According to reports, buyers are still in the market despite high prices to secure the commodity amid increasing supply concerns. Futures also gained amid speculation that buyers in China, the largest consumer, may boost purchases to replenish reserves before the Lunar New Year holiday. The week-long holiday starts from 2nd February.
Natural-rubber inventories in China declined 175 tons to 68,675 tons, based on a survey of 10 warehouses, according to the Shanghai Futures Exchange, which is about 55 percent lower than last year's peak of 151,832 tons.
China's economy expanded 10.3 percent in 2010 to $6.04 trillion, the fastest pace in three years, which compares with 9.2 percent in 2009. China's vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to forecasts by the China Association of Automobile Manufacturers.
The unprecedented upswing in NR prices seen at the Colombo Auctions also, breaking all recent records, should be watched with caution by the producers and consumers alike for contrasting reasons.
(Source: http://print.dailymirror.lk/business/127-local/34202.html)