MUMBAI: Indian rubber futures are likely to trade in a range this week as rains in the top producing state may cut spot supplies as well as buying by tyre makers, analysts and traders said on Monday.
Monsoon rains, vital for farm output in India's trillion-dollar economy, have hit the country's southern Kerala coast as scheduled, the chief of the weather office said on Monday. Kerala is the biggest producer of rubber in the country. "Rains have come. Obviously arrivals will go down in coming weeks. Tyre companies also cut buying in monsoon months," said Shiji Abraham, analyst with JRG Wealth Management.
"I am not expecting much volatility in prices this week." Tyre companies reduce their inventories during rains as humidity leads to fungus attacks, hurting demand during monsoon, Abraham said.
The benchmark July contract on the National Multi-Commodity Exchange (NMCE) was down 2.2 percent at 16,558 rupees per 100 kg. The contract may test support at 16,450 rupees, Abraham said. Spot price of the most traded RSS-4 rubber (ribbed smoked sheet) eased by 100 rupees to 16,950 rupees per 100 kg in Kottayam, Kerala, Rubber Board data showed.
It rose to an all time high of 17,050 last week because of lower supplies and robust demand, and is still trading up 3,050 rupees in 2010. India's rubber production is likely to rise 7.5 percent to 893,000 tonnes in 2010/11 helping reduce costlier imports, a senior Rubber Board official said last month. Tokyo rubber futures held firm on Monday near a three-week high as crude oil firmed, while physical prices were also mostly steady.
(economictimes.indiatimes.com)
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