By Rahul Dhuri
MUMBAI – The bearish trend in rubber futures on the Indian Commodity Exchange is likely to continue in the coming week due to weakness in global markets, analysts said.
The December contract on ICEX was last trading at 12,108 rupees per 100 kg, down 52 rupees from Monday. Earlier in the day, the contract had hit a three-month low of 12,035 rupees per 100 kg.
Over the past one week, prices have fallen 347 rupees.
Prices on global exchanges remain under pressure due to worries about a slowdown in China’s economy and expectations of higher global production. China is a major consumer of natural rubber.
According to Association of Natural Rubber Producing Countries, global production of natural rubber in Jan-Sep rose 1.5% on year to 9.78 mln tn, and is anticipated to increase 5.8% to 14.6 mln tn in 2019.
In early trade, the most active April contract of rubber on Tokyo Commodity Exchange hit a two-year low of 156.60 yen (99.70 rupees) per kg today, tracking weakness in rubber contracts on the Shanghai Futures Exchange, analysts said.
However, short covering by market participants after prices fell and the yen weakened against the dollar supported rubber contracts, traders said.
Meanwhile, a fall in prices of natural rubber in key spot markets of Kerala is also seen weighing on rubber contracts on the domestic bourse, said Murugesh Kumar, product manager at Inditrade Derivatives and Commodities Ltd.
Rubber prices in key spot markets of Kerala are likely to fall in the coming days due to subdued demand from domestic stockists and tyre manufacturers, said Joy Alencherry, a rubber trader based in Kottayam.
In Kochi and Kottayam, the widely-traded RSS-4 variety of rubber was today sold in the range of 120-123 rupees per kg, down 1-2 rupees from Monday.
Rubber prices in spot markets have hit a seven-month low and may fall further in the coming weeks, traders said.
Ongoing global uncertainties, weakness in benchmark contracts on TOCOM, and fall in prices of natural rubber in spot markets are likely to exert pressure on rubber contracts on ICEX. The December contract may find support at 11,500 rupees per 100 kg and face resistance at 12,700 rupees in the next few sessions, experts said. End
US$1 = 72.60 rupees
Edited by Avishek Dutta