MUMBAI, March 29 (Reuters) - Indian rubber prices are likely to set new record highs this week on firm global markets and a shortfall in production due to a drought-like situation in the biggest growing region, traders and analysts said on Monday.
"Summer is very hot this year and it is hampering tapping process," said V. N. Viswamohan Prabhu, a spot trader based in Kochi in southern Kerala state.
The state is the biggest producer of the rubber and currently experiencing drought like situation in many districts, its revenue minister told the state assembly earlier this month.
The key Tokyo rubber futures contract hit an 18-month high on Monday, as firmer oil prices and tight supply underpinned sentiment which turned positive after prices topped major resistance of 300 yen last week. See [ID:nTOE62S078]
The benchmark April contract NMRUJ0 on the National Multi-Commodity Exchange (NMCE) hit a high of 15,935 rupees per 100 kg on Monday, the highest level for near-month contract since futures trade was introduced in 2003.
Spot price of the most traded RSS-4 (ribbed smoked sheet) rubber hit a record high of 15,550 rupees in Kottayam, Kerala, as per data compiled by the Rubber Board. The spot price has risen by nearly ten percent so far in March.
"Despite higher prices tyre markers are still buying. Market may set new high this week," Prabhu said.
Usually rubber supplies shrink in summer season in India. In 2009/10, output in the world's fourth biggest producer is expected to drop 4 percent to 830,000 tonnes from 864,500 tonnes a year ago.
(in.reuters.com)
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