[Geojit Comtrade] Daily report on Natural Rubber: October 29, 2014

MARKET COMMENTARY

⊳ Natural rubber stretched losses for the second consecutive day on Tuesday. In the physical market RSS4 edged lower from the two month high to Rs.125 a kg, while on NMCE, the most active December rubber futures lost nearly one per cent. While subdued demand from the tyre sector continues to weigh on overall market sentiments. However, rebound being witnessed in the overseas market along with tight supplies is likely to lend firm support. Despite it being the peak production phase, natural rubber production in the major rubber growing areas in Kerala is yet to resume to full swing after the monsoon break.

⊳ Positive moves are being witnessed in the major overseas market on Wednesday. TOCOM rubber futures were up over one per cent, buoyed by upbeat industrial production data from Japan. Expectations that the top natural rubber producing countries are likely to take more measures to prop up prices too lend support.

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⊳ 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

Correction being witnessed is likely to extend towards 12200-12100 ranges, which if held downside could call for a bounce towards 12500 or more to 12700 levels. However, unanticipated fall below 12100 with sturdy volume may see weakness creeping in

TURNAROUND