As the coronavirus spreads beyond China and stock markets around the world are spooked, benchmark rubber futures on the Tokyo Commodity Exchange ended lower on February 26, with the most active July contract down 1.2% lower at 180.1 yen/kg ($1.64/kg). This influenced the Indian markets, with the most active March contract on the domestic bourse ending at Rs 13,405/100 kg on February 26, down 0.2% from the previous close.
The continued shortfall in supply in India, coupled with expectations of a rise in demand from tire manufacturers in the country, led to a slight rise in natural rubber prices in key markets of Kerala. With just two-thirds of Indian rubber plantations actively tapped, there is a 35% supply crunch in the market at the end of the peak season. Yield has been falling with the rise in temperatures and tapping is expected to end at the end of February, earlier than usual. The supply crunch is expected to worsen.
According to traders, the widely-traded RSS-4 variety on February 26 in Kochi and Kottayam was higher by Rs 1 or so from the previous day, at Rs 135-136/kg ($1.88-$1.89/kg). Data from the Rubber Board showed rubber at Rs 135/kg ($1.88/kg) in Kottayam and Kochi, unchanged from the previous day in both markets.