India rubber falls more than 6 pct on higher tapping

MUMBAI, Sept 25 (Reuters) - Indian natural rubber prices fell more than 6 percent in the last two weeks as planters increased tapping at the end of monsoon and demand stayed weak, analysts and traders said.

The most traded RSS-4 (ribbed smoked sheet) grade in the Kottayam market fell to 132.50 rupees per kg from a record high of 141 rupees on Sept. 10, Rubber Board data showed.

“Tapping has improved in the last few days as the monsoon season has almost ended...plenty of carryover stocks are also there,” said Alex Mathews, head of research, Geojit Financial Services Ltd.

Tapping comes down substantially in the rains as latex flows decrease when the trunk is damp.

Total natural rubber production rose 28.1 percent in the first five months of 2008/09 to 312,565 tonnes. Stocks at the end of August stood at 108,600 tonnes, up from 82,607 tonnes a year ago.

A decline in oil prices and weakness in demand also pulled down the prices, said Vibhu Ratandhara, an analyst with Bonanza Commodity Brokers Pvt Ltd. Crude oil has tumbled 25 percent since hitting record highs of more than $147 a barrel in mid-July, dragged down by mounting evidence high energy costs and economic woes cut global fuel consumption.

Natural rubber prices often take cue from crude prices as a fall in oil prices usually encourages a shift away from natural rubber to synthetic rubber, a petrochemical product.

Buyers have sidelined themselves on hopes of further fall in prices, said Biju John, a Kottayam-based rubber dealer.

Arrivals in the physical market were about 900-1,000 tonnes, while demand was only 300-400 tonnes, he said.

Most of the commodities corrected in the last few months, but rubber has not, so there is a plenty of room left, said Mathews.

“Prices are likely to come down to 120 rupees by the end of October,” he said. (Reporting by Debiprasad Nayak, editing by Harish Nambiar)