[Geojit Comtrade] Daily report on Natural Rubber: October 28, 2014

MARKET COMMENTARY

⊳ Indecisive moves were witnessed in the local natural rubber market on Monday. In the physical market, RSS4 was held near the two month high hit last week while on NMCE the grade varied in narrow ranges in lacklustre trades. A retreat witnessed in the international market coupled with jaded demand from the tyre sector weighed on though limited arrivals and some optimism prevailing in the market over market support schemes lend firm support.

⊳ On Tuesday, natural rubber resumed to rise in the major overseas market. TOCOM rubber futures inched up towards two month high though weak equities and strengthening yen pondered upon. Also, caution prevailed in the market ahead of two day FOMC meeting that starts today. SHFE and AFET rubber futures moved up as well, reversing previous session losses.

MARKET NEWS

⊳ TOCOM October rubber futures expired with 395 lots being delivered compared to 615 lots delivered in the previous month.

⊳ 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

Even as some indecisive moves were witnessed in the previous session, it seems mild positive bias exist. However, it is necessary to break and sustain above 12700 to strengthen such sentiments. Else, corrective moves are likely towards 12300 ranges and weakness is likely to creep in.

TURNAROUND