Top grade rubber crepe prices in Sri Lanka fell to Rs 545 per kg last week - down from high of Rs 700 per kg a month ago.
Rubber futures in Japan have fallen to 384 yen per kg on 14th March 2011 - down from high of 535 yen just a month ago.
Prices in Japan are falling due to increased concerns of demand weakening after earthquake and tsunami disasters in Japan, and rising oil prices hurting car sales in China.
Thailand rubber prices have also dropped similarly recently.
This should serve as a reminder to investors of volatility and unpredictability of commodity prices - companies that depend on commodities should not trade at premium valuations.
Investors in plantations with high exposure to rubber (e.g. AGAL, HOPL, KGAL, KOTA, KVAL, MAL, NAMU etc) and even new IPO of Free Lanka Capital (which has large exposure to rubber) should analyse impact of falling rubber prices carefully before investing, remembering that wage hike will also happen from April 2011.