BUSINESS

Traders call for ban on rubber Futures

By Commodities Online
May 14, 2007 22:39 IST

Futures trading in natural rubber has always been a bone of contention for traders, growers and manufacturers for quite sometime in India.

With the market witnessing major price fluctuations in the recent past, the fear over rubber Futures gained more credence.

With more and more complaints against market manipulation by rubber Futures traders, the Rubber Board tried to rein in the trend by making licence mandatory for traders involved in natural rubber business. However, the issue is still simmering with more complaints being filed by the industry players.

The latest complaint against rubber Futures came from the traders. Demanding a ban on Futures trading in natural rubber, Cochin Rubber Merchants Association stated that farmers and traders are unanimous that Futures trade is only beneficial to speculators.

In a statement issued to the media, N Radhakrishnan, president of CRMA said growers were denied their due benefit during the peak season last year due to speculation. Radhakrishnan alleged that speculators propagated the prices would increase and created an artificial scarcity of natural rubber in the market.

Despite having heavy stocks and an all-time

high production, natural rubber was not available as per the demand and the industry resorted to more imports. He added that the export of rubber was also affected and the credibility of traders was at stake.

The exporters were unable to offer firm price to the foreign buyers due to the big fluctuation in rates.

The association claims that 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 a margin of one per cent and as such, it cannot afford to work withstanding the high volatility in prices created by the Futures market, he pointed out.

Radhakrishnan said rubber could not be included in Futures trade as it violated some of the recommendations of Kabra Committee report on Futures trading in commodities submitted to the government of India in 1994.

Rubber is a commodity controlled under licence by the Rubber Board and its inter-state movements are regulated. Such regulated commodities cannot be freely traded in the Futures exchanges, he said.

Commodities Online

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