Domestic Rubber futures gained significantly on strong domestic demand against the tight supply situation. Benchmark July 2010 contract on NMCE surged Rs 512 or nearly three percent to Rs 18349 per 100 kg. The counter is now trading with smart gains nearly the session high.
India's natural rubber prices made a new record recently on the back of reduced arrivals due to monsoon in Kerala and tight demand-supply condition.
It is a new record, heavy rains have affected rubber tapping and there is strong demand simultaneously from the domestic tyre industry”, leading dealer from Kottayam reported.
ANRPC Outlook Remains Strong
As per the latest updates from the Association of Natural Rubber Producing Countries, chances of improvement in supply seem to be remote, demand is likely to gain further strength in the short and medium terms thanks to a renewed outlook for global economic recovery.
Potential further strengthening of the baht and the ringgit on China's loosening stance on the Yuan could be another factor supporting rubber prices. China's policy on the Yuan offers scope for increased demand from the country in the end.
As supply remains tight and demand strong, unhealthy speculation may come into picture causing short-lived bubbles in the market. However, large extent of rubber trees cultivated from 2005 onwards offers possibility of an improvement in supply after 2011. At the same time, if largely farmers go for replanting their low yielding aged trees, mostly planted during 1980s, the expected improvement in supply need not take place.
Global supply of natural rubber would grow only slower this year than the rate anticipated earlier. Forecasts based on preliminary estimates and reports available up to mid-June, point to a 5.2% growth, lower than the 6.3% rate anticipated in March and 6.1% rate anticipated in May.
Data and estimates available up to May 2010 reveal that the demand for natural rubber is strong in China, India and Malaysia. About 47% of the global consumption of natural rubber during 2009 was in these members of the ANRPC.
Rubber Futures Dip In Global markets
Key Tokyo rubber futures fell on Wednesday, hurt by a broad slide in commodities the previous day when fears over the outlook for the global economy prompted investors to refrain from taking risks. Traders expect upward price pressure on supply shortage to lift the TOCOM spot contract in the next couple of months. That could possibly also help raise futures prices across the curve.
Rubber futures in the benchmark Tokyo commodity Exchange plunged sharply today. The December 2010 contract touched the low of 266.50 Yen a kg and ended the session lower by 5.2 yen at 269.50 yen a kg.
Rubber November futures in China's Shanghi futures ended the session lower by CNY 150 at CNY 21585 tonne.
(indiainfoline.com)
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