[Geojit Comtrade] Daily report on Natural Rubber: November 16, 2012

MARKET COMMENTARY

A mixed trend was witnessed in the domestic natural rubber market on Thursday. While prices in the spot market hovered near a two and a half month low, the most active December rubber futures in NMCE inched further lower towards its weakest in eight weeks. In the mean time, latex (drc 60%) prices bounced back. Even as the underlying market fundamentals pressure prices to move south, positive moves in the international market and lessening gap between prices in local and overseas market is likely to cushion the fall.
Sentiments were mixed in the major international rubber market on Friday. TOCOM rubber futures dropped following a two day rise, trimming its weekly gain while, SHFE rubber futures were seen paring initial losses. Media reports of China stockpiling natural rubber hardly influenced the market.

TECHNICAL VIEW

As a part of efforts to support prices and farmers, China has started stockpiling natural rubber and will buy between 150000- 200000 tonnes from the domestic market for the state reserves.
Thailand, Indonesia and Malaysia will be meeting on 11th and 12th December in Phuket to seek ways to stabilise rubber prices.
Malaysia’s natural rubber exports fall 3.4 per cent to 60337 tonnes in September on MoM basis.
Vietnam is likely to be among the top three natural rubber exporters in 2012, surpassing Malaysia, according to ANRPC.
According to Rubber Trade Association of Japan, crude Rubber inventories at the Japanese ports dropped to 5833 tonnes by October 31st from 6244 tonnes on October 20, 2012.
Thailand, Indonesia, Malaysia began reducing exports of natural rubber on Oct. 1, and plan to cut overseas sales by 180,000 tons this qtr, says Yium Tavarolit, chief secretary of the International Rubber Consortium.
According to Association of Natural Rubber Producing Countries, Malaysia slashed the production forecast for 2012 by 50000 tonnes to 950000 tonnes.

TECHNICAL VIEW

RUBBER Dec NMCE Even as the trend stays weak, now it requires clearing 17100-17060 to continue the down trend possibly towards 16900-16800 region initially or more. If prices hold the support at 17100-17060 levels, could call for a brief pullback towards 17400 or more to 17650. However, sustained trades above 17650 may diminish the prevailing negative bias.