Daily report on Natural Rubber: August 22, 2012

MARKET COMMENTARY

• Sentiments stayed weak in the domestic natural rubber market. Extending losses, natural rubber was seen inching lower on Tuesday after the recent bounce back from its weakest level since September 2010. In the spot market, RSS4 grade rubber edged down, while NMCE rubber futures trimmed its initial losses. Following an initial fall of more than one per cent, the most active September rubber futures managed to recover the earlier losses only to succumb to higher level selling to end the session in red. Even as attempts by the top rubber producing countries to prop up prices improved the sentiments, reportedly higher stocks, rising natural rubber production and unfavourable macro-economic conditions are likely to weigh over the market.
• A mixed trend is being witnessed in the international market on Wednesday. Thailand planning to devote more funds for market intervention may provide cushion to the declining prices.

• MARKET NEWS
• Crude rubber stockpiles held at Japanese warehouses fell 14.1 percent to 7,993 metric tons on Aug. 10, according to data from the Rubber Trade Association of Japan.
• Thailand is planning to spend an additional 15 billion baht on rubber in rubber intervention. So far, around 80000 tonnes of rubber has been procured from the farmers under the program.
• According to a report appeared on Bloomberg, rubber inventories in China’s bonded warehouses are likely to climb to 250000 tonnes by the end of August.
• Tyre-grade rubber tumbling to their lowest since 2009 in the international market reignites worries over default.
• Rubber inventories in the warehouses monitored by SHFE rose 10.4 per cent to 25736 tonnes last week.
• In the latest attempt to prop up natural rubber prices, top three natural rubber producing countries, Thailand, Indonesia and Malaysia, have agreed to cut down rubber trees and trim exports by 300000 tonnes.

TECHNICAL VIEW

RUBBER Sep NMCE

The slippage past 16800 failed to evolve into a major sell off in the previous session and a pullback was seen after taking support at 16705. However, the trend still remains on the weaker side and prices may succumb to higher level selling. For the day, while it is likely to continue the current selling sentiments, pullbacks extending beyond 17050 will probably have the potential to lift prices towards 17140-17250 followed by a turn lower. Break above 17500 will bring about a mild positive bias.

Source: Geojit Comtrade

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