The Hindu Business Line : `Rubber futures detrimental to daily trade'

The volatile speculation in rubber futures is adversely affecting not only the daily trade but also the smooth functioning of the rubber sector, the Cochin Rubber Merchants Association has said. Growers were deprived of their due benefit during the peak season last year since most of them were holding stock in anticipation of better prices. In spite of having heavy stocks and an all-time high production, goods were not available according to the demand and the industry resorted to more imports.

This strange situation was created by the speculators in futures trading, representatives of the rubber trade, industry, small and large growers and processors said at the meeting called by the Rubber Board at Kottayam.

The existing decades old marketing system is getting destabilised thanks to the influence of futures trade, which nurses the ambition of the speculative traders.

The traditional trader acted as the conduit between the grower and the consumer and ensured that the rubber needed by the industries reached the destination, governed by terminal market prices. Rubber trade has been functioning at less than 1 per cent margin and as such it cannot afford to work withstanding the high volatility in prices created by the futures market, they pointed out.

The export sector has also suffered due to the speculative nature of futures trade. Exporters could not offer firm prices to their foreign buyer due to the volatility in prices and uncertainty in supplies, a press release issued by the Association said. They also contested the inclusion of rubber in futures trading saying that it was against some of the specific recommendations of the Kabra Committee report on Futures Trading in Commodities submitted to the Government of India in 1994.