[Geojit Comtrade] Daily report on Natural Rubber: May 15, 2014

MARKET COMMENTARY

Rubber futures on the National Multi-Commodity Exchange of India were mixed on Tuesday with most active June contract down compared to previous day. Meanwhile in the spot market the price increased marginally due to some buying at lower levels. In the spot market, good demand was reported from tyre companies. Moreover, decline in natural rubber output in April 2014 further supported prices. India’s natural rubber output continued to decline in April, falling 3.8 percent on year to 51,000 tonnes from 53,000 tonnes same period a year ago, Rubber Board data showed. However, higher imports of natural rubber amid weakness in the international market might make it difficult for rubber prices to sustain at current levels. India’s imports of natural rubber surged 83.7 percent on-year to 26,445 tonnes in April 2014, and exports fell considerably by 98.2 percent on year to 28 tonnes, Rubber Board data showed.

MARKET

⊳India’s natural rubber output in April declined 3.8% year-on-year to 51,000 tonnes against 53,000 tonnes a year ago, data from the Rubber Board showed. Production had fallen 2.8% in March.

⊳India’s imports of natural rubber surged 83.7% on year to 26,445 tonnes in April, and exports fell by 98.2% on year to 28 tonnes.

⊳Rubber inventories in India were at 235,000 tonnes at end of April, up from 232,000 tonnes a year ago.

⊳India’s rubber consumption in April was 81,500 tonnes, against 82,980 tonnes a year ago, and 86,000 tonnes in the previous month, according to the Rubber Board data.

⊳ China might miss its economic growth target for the first time in 15 years as data points to a sharper-than-expected loss of momentum and top leaders are talking about a “new normal” of slower growth.

⊳ The Tokyo Commodity Exchange launched a new trading platform on May 7 and added a night session between 0800 GMT and 1400 GMT. For rubber, the evening session is 0800-1000 GMT.

⊳Thailand has pledged to go ahead with a plan to sell 200,000 tonnes of rubber from government stocks, shrugging off strong opposition from farmers and helping drive down global prices to near the lowest in more than four years.

TECHNICAL VIEW

RUBBER June NMCE

Inability to break the stiff upside obstacle of 14450, expect to continue the selling pressure which could initially target 13950 initially followed by 13650. However a direct drop below 13600 would attract more liquidation in the counter. The upside reversal point is seen at 14700.

TURNAROUND