Kochi, Dec 23 (KNN) In the first quarter of the calendar year 2024 rubber prices are poised to surge which will provide relief to the rubber farmers in Kerala.

The increase will be due to constrained global supply and reduced carryover stock. 

Rubber prices have been a contentious issue in the high ranges of the state, and with the Church often leveraging rubber as a bargaining chip, the rally in prices could potentially dampen its influence.

Jom Jacob, a former senior economist with the Association of Natural Rubber Producing Countries (ANRPC) and currently the chief analyst of WhatNext Rubber Media International, said rubber prices could potentially rebound as global supply tightens by the end of the first quarter of 2024. 

And as this supply constraint intensifies in the subsequent months (April to August), prices may gain momentum in the second and third quarters.

However, the potential spike in natural rubber prices will be tempered by the slowdown in consumption in the United States and Europe.

“Total world production in 2023 is expected to reach 14.34 million tonnes, reflecting a 1.9 per cent decrease from the previous year. A significant decline in production in Thailand, Indonesia, and Malaysia, coupled with marginal decreases in Vietnam, China, and India, could cut approximately 0.7 million tonnes from the global output anticipated for 2023,” Jacob told TNIE.

To bridge the shortage expected in the first half of 2024, another possibility is to use the stock accumulated over several years before 2023, Jacob said. “But world supply was in deficit both in 2021 and 2022. Moreover, the larger part of the prior years’ accumulated stock should have been absorbed to meet the deficit in the first half of 2023,” he added.

Jacob estimates supply in 2024 to be at 15.05 million tonnes. And, with demand expected at 15.52 million tonnes, this could mean a deficit of around 0.47 million tonnes, he said.

Natural rubber prices are likely to strengthen as the gap between production and consumption in the country is anticipated to widen, said M Vasanthagesan, executive director of the Rubber Board.

(KNN Bureau)