The speculation was abetted by the anticipated higher benchmark price to be announced by the government soon following Kerala High Cort's directive in this regard and State Trading Corporation's re-entry into the market with a view to buy 20,000 tonnes of rubber from the open market. With the monsoon breaking over the state, the arrival of fresh stock to the market has also declined. The panic buying by some major tyre companies, following the Indonesian strife leading to a supply shortfall in the global market was also cited as a reason for the uptrend.

It may be recalled that the prime minister, last week backed his assurance to the hapless rubber growers with all possible help from the Centre. He had also directed the STC not to sell its stock of 10,000 tonnes of rubberin the domestic market and instead asked it to ship it at any cost. Market sources also feel the price will now stabilise at Rs 30 per kg in the coming weeks.

According to dealers, what moved the market last week was pure speculation and none of the agencies, including Rubber Marketing Federation (Rubbermark), did make any substantial intervention. Sources in Rubbermark admitted that the agency did not make any purchase on behalf of STC as the later was sending "impossible orders" to the Federation.

For instance, he said the agency had asked the Federation to purchase 100 tonnes of rubber at Rs 28 per kg on Thursday when the price was ruling at Rs 31 per kg.

They also feel that the two-month deadline set by the Government to execute the mandate was unlikely to be met with following low arrivals and ambiguity in STCs policy. STC sources, meanwhile, said the agency was committed to execute the deal but was in the "pre-purchase stage". He also said that in a bid to expedite the procurement, STC wouldcommission more agents.