[Geojit Comtrade] Daily report on Natural Rubber: October 30, 2014

Shanghai Copper Hits 7 Week High On Demand Expectations

MARKET COMMENTARY

⊳ Jaded demand continued to restrict gains in natural rubber prices in the local market. On Wednesday, RSS4 in the physical market ticked lower to Rs124.50 a kg while NMCE rubber futures traded rather steady in thin ranges. However, limited supplies and gains in the major overseas market lend firm support to prices. With positive moves being witnessed in the major international natural rubber market, the spread gap has narrowed down especially with respect to Bangkok RSS3, though the local produce still trading on a premium. In the meantime, a mixed trend is being witnessed in the international market on Thursday. TOCOM rubber futures rose to a two month high, stretching the previous session gains buoyed by a weaker yen while SHFE and AFET rubber futures inched lower.

Geojit

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

12200-12100 range seems to be a considerably good support, 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