Prices at Sri Lanka's two-day natural rubber auction rose this week on strong overseas demand coupled with crimped volumes because of a drought on the island, brokers said on Friday.
Damitha Perera of Forbes and Walker Commodity Brokers said prices could go higher, with forward sales taking place at 135 rupees ($1.38) per kg, compared with bids of about 132 rupees per kg this week.
"The drought is affecting the crop situation and it will shorten the latex supply. Overseas demand is also improving in the US and also China, so it's just a demand and supply situation," said Perera.
He said the lack of rain has so far not affected the quality of the crop, but warned that it could in the long run if the drought were to continue.
Monsoon rains are expected by the middle of next month, which could offer some relief to parched plantations.
A total of 405 tonnes of latex crepe, 100 tonnes of scrap rubber and 27 tonnes of sheet rubber were up for sale this week.
Some 142 tonnes of latex crepe, 49 tonnes of scrap rubber and 17 tonnes of sheet rubber went to auction last week.
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