Aug. 25 (Bloomberg) — Rubber production in India, the world’s fourth-biggest grower, will increase from September and meet a target for a full-year gain as latex yield improves during cool weather, a government board said.

Output is forecast to advance 0.3 percent to 867,000 metric tons in the 12 months to March 31, after dropping 13 percent to 209,825 tons in April to July because of dry weather, Sajen Peter, chairman of the state-run Rubber Board, said in an e-mail to Bloomberg News.

“The peak production season is yet to come and any revision of the target will be considered only after December,” Peter said. Similar early shortages in previous years had been “largely” offset by a later increase, Peter said.

A rebound in India’s natural rubber production may help cool a 42 percent jump in local prices in the past six months and meet rising demand for the commodity from tiremakers including MRF Ltd., JK Tyre & Industries Ltd. and Apollo Tyres Ltd. India’s rubber demand has gained from February because of steps taken by the government to boost demand, Peter said.

Rubber futures in Tokyo rallied the most since July 31 yesterday amid optimism a global economic recovery will boost consumption. The January-delivery contract fell 1.9 percent to 200.9 yen per kilogram ($2,137 a ton) at 2:23 p.m. Tokyo time.

India’s output is forecast to rise from last year’s 864,500 tons as production seasonally rises from September during cooler weather after the monsoon ends. More than 90 percent of the country’s rubber is from Kerala state in southern India.

Demand Gaining

Consumption in the year to March is forecast to rise 1.7 percent to 881,000 tons as a recovery in economic growth from the fiscal second half boosts manufacturing, Peter said. April- to-June demand in India, the world’s third-biggest rubber user after China and the U.S., gained 1.4 percent, the board said.

Imports in the 12 months to March 31 are forecast at 80,000 tons compared with 81,545 tons a year earlier

Rubber futures for September delivery on the National Commodity & Derivatives Exchange in India rose 0.6 percent to 10,328 rupees ($212) per 100 kilograms yesterday. The most active contract has gained 31 percent this year.

Natural rubber yields this year in Southeast Asia may “come under pressure” as an El Nino event brings unusual weather, Deutsche Bank AG said in a report this month. Thailand, Indonesia and Malaysia are the world’s top three producers. In India, government incentives to replace lower-yielding older plants with new trees may curb output in the next few years before the new growth become productive, Peter said.

“The accelerated replanting programs, adverse weather conditions and relatively stable currencies in the major producing countries may support an improvement in rubber prices,” he said.

Source: Bloomberg

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