India's Natural Rubber Production to Rise 8.45%

India's Natural Rubber Production to Rise 8.45%
22 April 2010 – India’s natural rubber (NR) production is likely to rise 8.45% to 901,680 tonnes in the current fiscal year 2010-11 compared with 831,400 tonnes for the fiscal year 2009-10, according to a projection by the Rubber Board of India.

If this projection materialized, this will be the first time that the natural rubber production of the fourth largest producer in the world, after Thailand, Indonesia and Malaysia will cross the 900,000 tonnes mark.

For the fiscal year 2010-11, the additional increase in production will be 70,280 tonnes as compared to a fall of 33,100 tonnes in the fiscal year 2009-10. Total production for the fiscal year 2008-09 was 864,500 tonnes.

In the case of consumption, a lower growth is projected. Total consumption is projected at 986,980 tonnes, an increase of 56,395 tonnes or 6.8% from the fiscal year 2009-10 figure of 930,585 tonnes. Total consumption for the fiscal year 2008-09 was 871,720 tonnes.

Lower domestic supplies due to bad weather and robust demand from tyre makers had forced India to more than double its natural rubber imports the previous year from 78,000 tonnes to more than 170,000 tonnes, which pushed up prices to historic records. Improvement in production this year is likely to bring down imports to pre-2009-10 level.


Higher prices seen for TOCOM rubber contract -traders
Posted: 23 Apr 2010 02:47 PM PDT
* April contract expires at record price for spot contract

* Massive buy-back into expiry triggers CBs, ups volatility

* Spike in spot contract price spreads across contracts

* For a technical view on TOCOM rubber, see [ID:nSGE63M0CY] (Adds technical analysis, background, quotes)

By Chikako Mogi

TOKYO, April 23 (Reuters) - Tokyo rubber futures are expected to continue to gain on tight physical supply, strong demand from China and lower cost compared to spot physical prices, traders said on Friday.

The spot April contract, which expired Friday, rose as high as 472 yen, the highest ever for any spot contract, and which pulled up nearby contracts. [ID:nSGE63M0A5]

The sharp gain led the Tokyo Commodity Exchange to investigate recent price volatility in rubber futures.

"Given the recent sharp moves in rubber prices, we are talking to members of the exchange to find out what has caused the recent volatility and checking open interest," a TOCOM spokesman said. [ID:nTOE63M04O]

On the physical market, Thai RSS3 was offered at a record high of $4.10 per kg earlier this month. TOCOM's May contract rose as far as 409 yen ($4.38) on Friday, but the next nearby contract for June delivery and beyond, hovering around 355 yen ($3.80), still makes Tokyo look cheap for overseas buyers.

Japan's largest commodity exchange, which lists gold, platinum, rubber and other industrial commodity futures, conducts such hearings when price actions appear excessive, though so far it has found no irregularities, the spokesman said.

But bets on prices falling, despite the rise in physical prices which pulled futures higher, were left uncovered until the very last minute and raised concerns about whether some commodity brokerages have failed to properly educate general investors about the practices of delivery, some traders said.

Other traders however pointed to a fundamental reason of tight supply for the spike in prices as weather conditions in top producer Thailand remain unfavourable.

"By mid-week this week, concerns about failed deliveries disappeared. It was fortunate that some hedgers unloaded their long positions so short sellers could buy back and close their positions and bail out of the market, at a huge loss," said a dealer at a Japanese commodity brokerage.

"But there are concerns about next month and beyond, given that prices have risen by more than 100 yen in the past month and supplies remain tight," the dealer said.

Shipments from Thailand to Japan have been delayed, making commodities brokerages reluctant to let go of their rubber holdings in Tokyo, where futures prices are still well below that of physical prices, even with the recent market spike, a dealer at another commodities trading house said.

An internal rule by TOCOM says on the 15th of the month, brokers are advised to remind their customers about delivery on spot contracts, traders said.

"If you were short selling, you should know this and should have closed your positions. Those who held their positions open until the end either took market volatility lightly or were not properly advised by brokerage houses," one dealer said.

Japan's crude rubber inventories totalled 6,477 tonnes as of March 31, down 10.3 percent from 10 days earlier, falling steadily from 8,222 tonnes as of Feb. 28, the highest level since July 20, and approaching a record low of 3,902 tonnes on Nov. 10. [ID:nTOE63E08K]

The drawdown in inventories reflects Japan's exports to China, which imported 28,606 tonnes of synthetic rubber from Japan in March, up 60.84 percent from a year earlier. [ID:nEAP001316]

The outlook for continued tight supply WILL ALSO KEEP INTENSIVE UPWARD PRESSURES ON NEARBY FUTURES CONTRACTS as short sellers will have to buy back the spot contract before its expiry, otherwise they will need to deliver the raw material.

"The fundamental issue here is the tight supply, keeping the negative spread for a while until seasonal factors in producer countries normalise," said Hiroyuki Kikukawa, general manager at Nihon Unicom.

But given that commodities prices generally tend to tread higher into the summer, the resumption in rubber tapping may not have much of a cooling effect on prices, he added. ($1=93.44 Yen)

(in.reuters.com)





Record rubber turnover at NMCE:Crosses Rs.200cr
Posted: 23 Apr 2010 02:43 PM PDT
AHMEDABAD (Commodity Online): India’s leading commodity bourse in rubber futures, National Multi-Commodity Exchange (NMCE) has recorded highest single-day turnover in rubber futures on April 21, 2010, when the rubber turnover on the exchange crossed Rs.200 crore mark for the first time ending the day with a total turnover of Rs.207.77 crore, highest since the launch of the contract.

In a statement issued on Friday, the exchange informed that rubber turnover at NMCE had crossed Rs.200 crores touching Rs.207.77 crores on April 21, 2010, with total traded volume of 12,010 MT with open interest of 8,516 MT. “All stake holders the producers, the cooperative societies, the investors who work on cash & carry, the tyre industry, other consuming industry, have all participated, which is giving very healthy sign. This is a grand achievement, highest ever since the launch of the contract. Earlier the highest turnover was on 26th December 2006 and it was at 189.8 Cr.

Commenting on the development, Anil Mishra, CEO, NMCE informed that the trading volume recorded high despite rubber production undergoing wintering season. A wintering season is the season when rubber trees shed their leaves and as a result tapping of rubber comes down. ““The price of Rubber has been very high due to lower global supply as a result of non conducive weather on the one hand and increased demand on the other. While the demand was burgeoning due to stimulus package and revival of the auto sector, supply was not able to keep pace. Good price is encouraging the farmers to tap as much as possible,” said Mishra adding that the producers now should not hold back their produce and take the advantage of huge price upswing.

Producers have kept their rubber in NMCE warehouses and taken funding from the bank against warehouse receipt. NMCE has presently about 7000 MT of Rubber stock in the warehouses at Aluva, Kozhikode, Ernakulum, Kakkanad, Thrissur, Kakkancherry and Pallakad, the exchange stated.

According to Mishra, it was the low tapping season. “NMCE's increased efforts of sensitization of all the stakeholders are showing good result and now all the stakeholders have understood the need of hedging their price risk in rubber,” Mishra commented.

(commodityonline.com)