The Hindu Business Line : ‘Rubber futures not benefiting growers’

Kochi, July 2 The Cochin Rubber Merchants Association has alleged that the growers, for whose benefit futures trading was introduced, are at the receiving end and have suffered heavily on account of futures.

And hence, “we once again strongly appeal to the Forward Markets Commission to allow futures trade in rubber only to the holders of Rubber Board licence and also direct the exchanges to be transparent in their deals and make available the names of the buyer & seller, the quantity and price at which rubber is traded and period of contract concluded and also put a cap on daily fluctuations of a maximum two per cent,” Mr N. Radhakrishnan, President of the Association, said here in a press release.

Daily fluctuation

He said the FMC’s directive to the commodity exchanges to limit the daily fluctuations to 4 per cent instead of the existing level of 6 per cent could not act as a deterrent to the deep malaise set in the rubber futures trade by speculators.

If a total ban on rubber futures trading could be enforced, at least the limit for daily fluctuation shall be restrained to 1 per cent at the first instance and subsequently to another 1 per cent cap after a reasonable cooling off period, he said.

The commission is aware that for many decades the annual average domestic rubber prices were higher than the international prices. Since the advent of futures trading, average prices of Indian rubber started registering a declining trend year-after-year, and in 2006-2007, it was lower by Rs 5.75 per kg than international price.

As of now, the price difference is over Rs 12 per kg.

The futures prices in the last six months fell down by Rs 24 per kg, which has had an adverse impact on the ready market which fell by Rs 22 per kg. But the international market which started at around Rs 86 per kg in the beginning of January 2007 and remained so at the end of June.

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