[Geojit Comtrade] Daily report on Natural Rubber: October 20, 2014

MARKET COMMENTARY

As the week’s session commences, natural rubber prices in the international market are seen rising. TOCOM rubber futures jumped to a one month high bolstered by weakening yen and Thai measures to push up prices. Also, lessening worries over economic growth in the US and decline seen in production in Malaysia too lend support. However, gains were limited on SHFE and AFET. In the meantime, range bound moves were witnessed in the local natural rubber market last week. In the physical market, RSS4 grade rubber traded in tight ranges of Rs.120.00-123.00 a kg to end the week’s session on a positive note. The commodity on NMCE too traded in narrow ranges. Underlying market sentiments seemed to be muddled. While concerns over demand and high imports continues to linger on, supply woes and moves by the top natural rubber producer Thailand to prop-up prices provided a boost to the sentiments.

MARKET NEWS

⊳ The Malaysian government has allocated 100 million ringgit ($30.4 million) to support rubber farmers following a slump in global prices to five-year lows. A subsidy programme will be activated when the price of SMR20 grade rubber falls to 4.60 ringgit per kg.

⊳ Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 0.6 percent to 167369 tonnes last week.

⊳ Thailand’s National Rubber Policy Committee approves a plan to buy rubber from October 22 to prop-up prices. According to the nation’s Deputy PM, Rubber Estate Organisation will spend 20 billion baht for building stockpiles. Another 10 billion baht will be allocated to rubber groups to buy rubber sheets.

⊳ Kerala Chief Minister Oommen Chandy demanded a total ban on rubber imports while submitting a memorandum to the PM, besides seeking imposition of higher duty rates on synthetic, sheet and block rubber and other rubber products.

⊳ Inventories in Qingdao, China’s main rubber-trading hub, fell to 143,800 mt as of Oct. 14 from 154,100 mt on Sept. 26, according to e Qingdao International Rubber Exchange Market.

⊳ Kerala Government decides to procure rubber from farmers at Rs.5 higher than the market rate and also to meet the Prime Minister to appraise the current situation in the rubber market in order to urge the latter to take necessary action.

TECHNICAL VIEW

RUBBER Nov NMCE

Sustained trades above 12300 with volumes are likely to see an extension to the present up momentum towards 12500 ranges or more. Slippage past 12100 may see the current mild positive sentiments fading off.

TURNAROUND