RUBBER COMMITTF-E'S AIMS.
The failure of rubber and of rubber shares to respond to the cut in the quota is not contrary to well-informed expectations. When it was announced last week that the International Rubber Regulation Committee had decided on a quota of 6o per cent, for the April-June quarter against the present 70 per cent. and 90 per cent. for the second half of 1937, the price of spot rubber immediately rose Id. per lb. to but has since lost the whole of the advance and early this week was as low as 6id. The movement is quite logical : the Committee is determined on a higher price and is aiming, it is believed, at 9d. per lb., but the objective will not be achieved for several months. Unless there is a sudden recovery in the motor industry of the United States, production of rubber will exceed consumption until April, and it will not be until a month or two later that world stocks at present amounting to about seven months' supply, show any marked decline.
Meanwhile, if rubber and rubber shares are to rise it is necessary for the speculator to take care of them and the speculator has lost his taste for anticipating the future. The estates have a fairly large accumulation of rubber to sell when prices begin to move. Their earnings on a restricted output and with rubber around 7d. per lb. are only a fraction of a penny per lb. on the average. If and when the International Committee have restored ninepenny rubber there will be good earnings even on a 60 per cent. quota, but even then not fantastic profits.
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