[Geojit Comtrade] Daily report on Natural Rubber: November 26, 2012

MARKET COMMENTARY

Bouncing back from its mid-September lows, NMCE rubber futures concluded the previous week’s session on a positive note, posting gains of over four per cent. The benchmark December rubber futures in NMCE climbed to a three week high while in the spot market quotes for RSS4 rose to Rs.175 a kg. Despite its being a peak production period, limited arrival and firm international natural rubber prices boosted the market sentiments, lifting prices even as the off take remained muted.
As the week’s session commence, a mixed trend is being witnessed in the natural rubber prices in the major overseas market. TOCOM reopened today after an elongated weekend holiday and the benchmark April rubber futures eased after hitting a four week high while AFET and SHFE rubber traded mostly steady. Chinese and Thai efforts to prop up natural rubber prices provided firm support to prices, yet burgeoning stockpiles in China weighed on amidst uncertain global economic outlook.

TECHNICAL VIEW

Crude rubber stockpiles held at Japanese warehouses rose 15.5 percent to 6,739 metric tons on Nov. 10, according to data from the Rubber Trade Association of Japan.
Traders in China are increasing imports of the natural variety from Thailand as expectations of stockpiling by the Chinese government push up domestic prices.
Rubber inventories in the warehouses monitored by SHFE jumped 35.5 per cent to 90325 tonnes the previous week to hit two and a half year high.
Thailand, the world’s biggest rubber producer, will expand a statebuying program by more than doubling purchases from farmers to support higher prices, according to Deputy Farm Minister.
Shanghai Securities News citing the country’s rubber industry group says large Chinese tire companies plan to establish a fund to strengthen pricing on natural rubber.
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.

TECHNICAL VIEW

RUBBER Dec NMCE

While the prevailing buying sentiments are likely to extend towards 17960-18100 regions, a lower correction possibly to 17760-17680 levels cannot be ruled out before resuming rising. However, slippage past 17500 regions will wane off the existing positive bias.

Source: Geojit Comtrade

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