COLOMBO (EconomyNext) – Sri Lankan natural rubber prices fell sharply at recent auctions but the market could be bottoming out with the onset of the low-production ‘wintering season’, brokers said.
However, synthetic rubber prices could also fall further increasing competition for natural rubber owing to low oil prices.
"A sharp drop in prices was witnessed as Latex Crepe 1Xs came down from 275 rupees to 250 rupees a kilo," Forbes & Walker Commodity Brokers said.
The number 2 grade eased off by about 40 rupees a kilo to 220 rupees while the number 3 grade fell by 30 – 35 rupees to 206 per kilo.
The brokers said that dry weather prevailed throughout February while early ‘wintering’ was evident in many rubber growing areas this year.
The ‘wintering season’ is the seasonal low-production period where supply declines from February to April every year as rubber trees shed leaves and latex output slows.
The brokers said prices of other grades of rubber also fell at Colombo auctions with a "marginal drop" for scrap crepe and the RSS No 1 grade suffering "severely", sliding to 255 rupees a kilo from 325 rupes.
Delays to a government assistance scheme for small holder producers of RSS added pressure on producers.
However, the brokers said crops are expected to reduce in March as Sri Lanka enters the wintering season.
Rubber prices in key producer countries like India, Thailand and Malaysia have been on an upward trend in February.