[Geojit Comtrade] Daily report on Natural Rubber: October 31, 2014

MARKET COMMENTARY

⊳ Natural rubber stayed under pressure in the local market despite some positive moves being witnessed in the international market. On Thursday, RSS4 in the physical market slipped to Rs.124.00 a kg while on NMCE, the grade tumbled more than two per cent to hit its lowest level in about two weeks on lingering worries over demand. Still, supply crunch and improving sentiments in the major overseas market is likely to lend lower level support.

⊳ As the week’s session culminates, a mixed trend is being witnessed in the international market. On Friday, SHFE rubber futures were seen ticking up while TOCOM and AFET rubber futures dipped. Decline in crude oil prices probably weighed on the overall market sentiments. However, TOCOM rubber futures are probably poised to post monthly gains.

MARKET NEWS

Oil Prices Jump Over 1% On Delayed Opec+ Output Hike

⊳ 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

Unexpected fall below 12100 has diluted the prevailing mild positive sentiments and may have the potential to test 11950/11850 or more. Alternatively, a rise past 12250 may lessen the prevailing weakness.

TURNAROUND