[Geojit Comtrade] Daily report on Natural Rubber: October 27, 2014

MARKET COMMENTARY

⊳ Natural rubber ended on a positive note in the local market last week. RSS4 in the physical market rose towards a two month high in towards the close of the week and a similar trend was witnessed on NMCE too. Despite worries over demand, apprehensions over supply along with gain in natural rubber prices in the major overseas market improved the sentiments in the local market.

⊳On Monday, natural rubber in the major international market are seen declining. TOCOM rubber futures retreated from the two month high on lingering concerns over demand from the top consumer China. Comments from the China’s central bank that the Q4 economic growth in the country was likely to slow down to 7.2 per cent weighed on overall market sentiments. SHFE and AFET rubber futures dipped as well.

MARKET NEWS

China, Hk Stocks Rebound As Report On Beijing’s New Budget Deficit Plan Lifts Sentiment

⊳ Thailand, Indonesia and Malaysia likely to meet on Nov. 20-21 to discuss plans to set prices together and reduce supply.

⊳ Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 2.5 percent to 171507tonnes last week.

⊳ Indonesian Rubber Association makes a second appeal to its members to impose strict limit on sales until the second quarter of 2015

⊳ 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.

⊳ 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 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

While the gains witnessed in the previous session may have the potential to stretch towards 12700 initially, it is mandatory to break and sustain above the same for the buying to continue towards 12800-12850 or more. Inability to clear 12700 with volume could call for corrective dips to 12450-12300 levels and slippage past below 12200 could induce weakness.

TURNAROUND