NMCE Rubber Intraday Outlook

Commodities Technical Analysis | NMCE Rubber Intraday Outlook | 18 November 2009 | www.commodityonline.com

Rubber futures in NMCE continued down trend on Tuesday, a spill over weakness from crude oil prices also weighed on prices. At the same time most Asian markets settled higher yesterday. Benchmark TOCOM April settled 1.6 yen higher at 238.3yen per kg.

According to the Thai Rubber Association, rubber output from Thailand, the world’s largest producer, may decline about 10 percent this year as heavy rainfall disrupts production. Output will be 2.7 million to 2.8 million metric tons in 2010 compared with 3.1 million tons in 2008. Yields also fell as fertilizer costs rose, curbing use.

In the January-October period, China produced 540.65 million tons of tires, up 15%. However rubber imports to China are in a declining trend. China imported 100,000 tons of natural rubber in October, preliminary data from the General Administration of Customs. In the year to date, total imports fell 2.8% to 1.41 million tons, the customs department said.

According to the country's Rubber Board, India's natural rubber output this year will likely total 835,000 metric tons, down 5.2% due to adverse weather and an increasing proportion of low-yield, aging plantations. India's rubber replanting program is running way behind schedule and 70,000 hectares need to be replanted immediately to improve yield. Most of the trees of those 70,000 hectares are between 28 and 29 years old. In India only 9,000 Hectares Rubber Area Replanted In 2008

Indonesia's natural rubber output is likely to fall to 2.59 million metric tons this year from 2.75 million tons last year due to dry weather has affected yields.

Reports from Thailand, Thailand expected to expand rubber area by around 870,000 hectares in northern and northeastern regions, where the weather is more conducive for rubber tapping. Natural rubber output in the January-August period in Thailand, the world's largest producer, was 1.9 million tons, 8.3% lower from a year ago.

In the mean time, India's natural rubber import hit a record high of 126,000 tonne during Apr-Oct, according to provisional estimates of the Rubber Board. The increase during Apr-Oct is a good 219% year on year, according to the board. According to projections by the Automotive Tyre Manufacturers Association, natural rubber import may touch 150,000 tn in 2009-10. According to latest report from International Rubber Study Group, Global rubber supply may jump 30 percent by 2015 and may increase by 50 percent by 2020, due to dramatic increase in total new planting. In 2008 total new planting is estimated to have reached around six times the level of 2000.

NMCE rubber moved in the range of Rs11395-11301 last traded at Rs.11330 (11398) Open interest decreased by 44 to 1757. Rubber stocks at NMCE accredited warehouses increased by 118Mt. to 1559 Mt.

INTRADAY OUTLOOK

NMCE Rubber December futures support lies at 11289 and 11248. Resistance is at 11383 and 11436.