KUALA LUMPUR — The Malaysian rubber market is likely to extend its rally next week buoyed by continued buying momentum on optimism over global demand.
A trader said the softer ringgit had spurred stronger overseas demand and some players are worried that local rubber, especially Standard Malaysian Rubber (SMR) 20, will test the higher levels again.
“There is a tendency for the SMR 20 to test the 807 sen level again.
“Speculative buying, further weakening of the ringgit (against the US dollar), steady crude oil prices, coupled with positive sentiment from regional peers could boost the local price,” he said.
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The 807 sen level, the highest since September 2013, was tested last month when the ringgit was traded at 4.46 against the US dollar. On Friday, the local note was traded at 4.42 against the greenback.
The trader however cautioned that profit-taking may also take place next week if external factors move in the opposite direction.
“Asian rubber markets were on the upward momentum recently due to a firmer greenback regime that made the commodity cheaper as the local currencies weakened.
“If the greenback makes a correction, and oil declines again, we might see a profit-taking phase in the local rubber market as it had indeed made a lot of gains in several sessions recently,” he added.
For the week just ended, trading was bullish but mixed towards the end with demand for tyregrade SMR 20 remaining intact.
On a Friday-to-Friday basis, the Malaysian Rubber Board’s noon price for SMR 20 rose 35 sen to 785 sen a kg and latex-in-bulk added 13.5 sen to 588 sen a kg.
The 5 pm unofficial closing price for SMR 20 advanced 22.5 sen to 788 sen a kg, while latexin- bulk gained 15 sen to 587.5 sen a kg.
