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[Geojit Comtrade] Daily report on Natural Rubber: March 14, 2013

MARKET COMMENTARY

Steep plunges in natural rubber prices in the international market incited selling pressure in the local market too. On Wednesday, RSS4 in the spot market edged further lower to Rs.160 a kg, tracking a slump in natural rubber prices in the trendsetting TOCOM and Shanghai exchanges. Fears over burgeoning stockpiles in China and Japan and possible liquidation dragged down the commodity in the overseas markets. Moreover, reports that China’s monetary policy had turned to neutral from loose and with Thailand’s rubber buying scheme to end by this month squeezed the prices. SHFE rubber futures tanked to six month low on Thursday while on TOCOM, prices were near the three month lows. Quotes in the major Bangkok and Malaysian market tumbled, with Malaysian SMR 20 being on a huge discount to Indian RSS4. Still, NMCE rubber futures were seen reversing initial losses towards the close of the previous day’s session, probably as market were in the midst of lean production phase.

MARKET NEWS

Thailand’s Rubber Estate Organization spent 19.4b baht to buy 194,028 tons of rubber sheet from farmer cooperatives, said Pakdihan Himathongkam, a deputy government spokesman, without giving a time frame.

Malaysia’s natural rubber (NR) production rose by 15.3 per cent to 87,957 tonnes in January from December last year, according to the Statistics Department.

Indian car sales plunges to a 12 year low in February, falling about 26 per cent. Two wheeler and commercial vehicles sales drop too.

Total vehicle sales in China fell 14 percent from a year earlier to 1.35 million units in February according to the China Association of Automobile Manufacturers.

Crude rubber stockpiles held at Japanese warehouses rose 3.8 percent to 11,363 metric tons on Feb. 28, according to data from the Rubber Trade Association of Japan while rubber inventories in the warehouses monitored by SHFE are on a three year high.

India’s natural rubber output fell five per cent to 61000 in February. Imports and consumption declined as well. Consumption dropped by nine per cent while imports slumped a whopping 61 per cent during the same period.

TECHNICAL VIEW

 RUBBER Apr NMCE

Broad Trend: Weak

Near Term: Slippage past 16100 is likely to induce weakness again in the near term. Prices now require clearing the congestion range of 16850-17050 to continue the positive momentum. Resistances

TURNAROUND

Resistances

LEVELS

Supports

16500/16700

17050-16100

16200-16140

16850/16950

16040/15900

17050/17200

15750/15600

 

Source: Geojit Comtrade

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