[Geojit Comtrade] Daily report on Natural Rubber: June 19, 2013

MARKET COMMENTARY

Sentiments were muddled in the local natural rubber market on Tuesday. While latex (drc 60%) prices continued to rise, RSS4 steadied. In the spot market, the grade was hovering near its strongest level in about seven months as supplies stayed thin. On NMCE, prices dipped, with the most active July rubber futures dropping 0.6 per cent. Despite supply woes and incessant rains in the major rubber growing areas, gains are likely to remain restricted owing to uncertain macro economic outlook and weak auto sector growth. Widening gap between the prices prevailing in the local and international market is also likely to attract imports. On Wednesday, natural rubber in the overseas market was seen falling. TOCOM rubber futures pared initial gains as investors grew cautious ahead of the US FOMC policy announcement. However, weak yen and rise in crude oil lend support amidst weak fundamentals.

MARKET NEWS

Thai govt through state-owned Rubber Estate Organization and exporters plan to set up a fund to trade rubber on the Agricultural Futures Exchange of Thailand, or AFET, according to the farm ministry.

Rubber inventories in the warehouses monitored by SHFE rose 0.2 per cent to 114208 tonnes last week.

According to Rubber Trade Association of Japan, crude rubber inventories in the Japanese ports as of May 31 fell to 14224 tonnes, down 654 tonnes over a period of ten days to its lowest level since March 10.

Natural rubber production in India rose 1.7 per cent to 59000 tonnes in May while consumption dropped 3.1 per cent to 83000 tonnes. Imports slumped 17 per cent to 17334 tonnes.

Natural rubber imports by China fell to 180000 in May compared to 227320 tonnes imported the previous month.

According to China Association of Automobile Manufacturers, wholesale deliveries of cars, multipurpose and sport utility vehicles increased 9 percent to 1.4 million units in May compared to 13 per cent growth achieved during the previous month.

According to ANRPC, natural rubber production from Indonesia is seen rising 5.0 per cent to 3.18 million tonnes while that of Malaysia is seen at 980000 tonnes, up 6.8 per cent this year.

TECHNICAL VIEW

RUBBER July NMCE

As long as 17500 regions remains undisturbed upside, lower corrective moves towards 17180 or more to 17000-16950 ranges seems possible.

TURNAROUND