Sheet rubber improves on short covering

Sheet rubber improves on short covering

Kottayam, July 28

Spot rubber turned better on Wednesday. The undercurrent was firm as the market continued to suffer from short supplies. Sheet rubber improved further to Rs 185 from Rs 183.50 on fresh buying and short covering. The Rubber Board's rate was a little lower at Rs 183.50 (182.50) a kg. Latex 60 per cent fell further journey on low demand. In the international market, Tokyo rubber futures rose nearly two per cent to a two-week high but gains were restricted followed by profit-taking at higher levels. The NMCE futures finished in red though the domestic scenario remained more or less the same.

Futures weak

The August series for RSS 4 weakened to Rs 184.02 (184.66), September to Rs 169 (171.86), October to Rs 161.40 (161.71) and November to Rs 160.39 (160.49) a kg on the National Multi Commodity Exchange. The volumes totalled 10468 lots and turnover 187.94 crores. The total open interest in all series was 5540 lots. RSS 3 improved at its August futures to ¥297.4/Rs 158.33 (¥293.5) during the day session and to ¥299(Rs 159.23) a kg during the night session on the Tokyo Commodity Exchange. The grade closed at Rs 149.04 a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 185 (183.50); RSS-5: 179 (178); ungraded: 169 (168); ISNR 20: 157 (156.50) and latex 60 per cent: 111 (112).



‘Climate change affecting rubber output'
Our Correspondent

Kottayam, July 28

An international workshop on climate change and rubber cultivation was inaugurated by Mr Sajen Peter, Chairman, Rubber Board, in the presence of scientists and researchers from ten countries, including Malaysia, Indonesia, Thailand, Sri Lanka, China and Cambodia, at the Rubber Research Institute of India (RRII), Kottayam.

Inaugurating the workshop, Mr Peter said the RRII has been tracking the temperature and has found that it is increasing steadily. There are more than 10 million small growers who depend on natural rubber cultivation for their livelihood in the producing countries and climate change has the potential to post serious threats to their living.

Climate changes affect rubber production and productivity and it is very important to conduct research on various aspects related to climate, said Dr Abdul Aziz Secretary-General, International Rubber Research and Development Board (IRRDB). Dr Stephen V. Evans, Secretary-General, International Rubber Study Group, also spoke. About sixty papers on various aspects of climate changes would be presented during the three-day workshop which concludes on July 30.




Rubber at Two-Week High as Asian Equities Rally Boosts Appeal
Posted: 27 Jul 2010 11:30 PM PDT
By Supunnabul Suwannakij

July 28 (Bloomberg) -- Rubber advanced for the second time this week, reaching a two-week high, as gains in Asian equity markets and a weaker Japanese currency boosted its appeal.

Futures climbed as much as 1.9 percent as Asian stocks rose, driving the MSCI Asia Pacific Index higher for the fourth straight day, on optimism over improving corporate earnings.

“Rallies across the Asian market spilled over to commodities, including rubber,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.

December-delivery rubber climbed as high as 268.6 yen per kilogram ($3,058 a metric ton) on the Tokyo Commodity Exchange at 12:16 p.m.

November-delivery rubber on the Shanghai Futures Exchange added 2.6 percent to 22,745 yuan ($3,355) a ton.

“A weaker yen supports the rubber market,” Kazunori Kokubo, general manager of the international business department at commodity broker Yutaka Shoji Co., said by phone from Tokyo.

The currency weakened to 87.90 yesterday from 86.88 on July 26, making the yen-denominated rubber contract more attractive for holders of other currencies.

Low stockpile levels in China and Japan led to speculation that buyers will step into the market to replenish inventories, Kokubo said.

“Warehouse stock in Japan is still very low and investors who hold short positions are worried about higher prices, prompting them to cover,” Kokubo said, referring to bets that prices would fall.

Data from the Tokyo exchange showed last week that natural- rubber stockpiles monitored by the bourse dropped by 29 percent to 1,341 tons as of July 10. It was the lowest level since at least 2001, according to exchange spokesman Seiki Ichimura.

Natural rubber stockpiles in China decreased 2,046 tons to 19,328 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said July 23.

(bloomberg.com)





Singapore Exchange Plans New Products as Derivative Trade Booms
Posted: 27 Jul 2010 11:29 PM PDT
By Jonathan Burgos

July 28 (Bloomberg) -- Singapore Exchange Ltd. plans to introduce new derivatives products to benefit from record levels of trading in the securities.

Contracts the bourse plans to introduce in the financial year ending June 2011 include futures and options that track European and Indian stock indexes, Janice Kan, senior vice president for derivatives at the Singapore Exchange, said in a July 26 interview.

The average daily volume of trading in futures and options totaled 240,292 contracts in June and 310,809 in May, exchange data showed. The record daily average across a whole year was 250,651 in 2008. Average daily trading in Hong Kong, whose stock market is four times the size of Singapore’s, was 456,742 contracts in June, according to the Hong Kong bourse’s website.

“The futures market thrives on volatility and uncertainty,” Kan said. “When there is volatility, people seek to hedge their investments. Futures are very efficient contracts to use for this.”

Historical volatility on Singapore’s benchmark Straits Times Index rose to a 10-month high in June as Europe’s mounting budget deficits sparked concern the sovereign debt crisis will spread. The gauge gained 3 percent last month following a 7.5 percent slump in May.

More than 10 stock and fixed-income futures and options instruments trade actively on Singapore’s exchange, bourse data show. Its Singapore Commodity Exchange Ltd. unit offers trading in futures for rubber, gold and coffee. Over-the-counter trading of iron ore, energy and freight-forward swaps are available on the clearinghouse SGX AsiaClear.

Euro Stoxx 50

Singapore Exchange announced this week a deal with Eurex, Europe’s largest derivatives exchange, to sell futures and options contracts linked to the Euro Stoxx 50 Index in the next six months. The contracts will be denominated in U.S. dollars.

The average daily volume of euro-denominated Euro Stoxx 50 Index futures traded on Eurex was more than 1.6 million contracts in the first half, while the options had 1.2 million contracts, Singapore’s bourse and Eurex said in a joint statement on July 26. The contract will be the Singaporean exchange’s first non-Asian index futures product.

“There is a lot of potential for this contract,” Kan said.

Her company will explore the feasibility of offering U.S. stocks futures and options after the European stock-index product is introduced, Kan said.

Within Asia, the bourse plans to offer options linked to India’s S&P CNX Nifty Index, she said. Nifty futures contracts are the third most-actively traded on the Singaporean exchange this year, bourse data showed.

Growth Engine

Kan said the exchange is also planning to revive trading on Chinese stock futures, which have not been active on the exchange since 2008. The bourse introduced a contract in 2006 based on the FTSE/Xinhua China A-50 Index.

Restrictions in China create demand for offshore trading in Chinese stock futures, even after the country introduced a futures contract in April, Kan said.

“Asia is the next growth engine for the world economy,” Kan said. “These products allow us to benefit from the trading flows into the region.”

The new products are expected to help SGX attract more overseas investors such as so-called high-frequency traders, Kan said.

High-frequency traders, who rely on computers to execute large orders at speeds usually at less than a thousandth of a second, now account for 25 percent of Singapore’s derivatives trading, up from about 10 percent two years ago, she said.

(bloomberg.com)





Sri Lanka rubber estate hopes for eco-friendly premium
Posted: 27 Jul 2010 11:26 PM PDT
July 28, 2010 (LBO) - A Sri Lankan rubber estate said it was expecting premium prices for a specialist rubber it was making after being certified for environmental growing and production standards.
Horana Plantations, a unit of Sri Lanka's Ceylon Theatres group, said its rubber and timber plantations had been certified for good forest management practices by the Forest Stewardship Council, an European organization helping guide 'fair trade' buyers.
The firm's rubber estates have been awarded Non-Timber Forest Products (NTFP) Certification by the FSC, the first for a Sri Lankan firm, it said.

"This certification has enabled the Company to obtain premium prices for the export of crepe and sole crepe rubber under the Fair Deal Trading agreement." Chief executive officer Rajiv Casie Chitty told shareholders in the annual report.

"This recognition has further encouraged HP-PLC (Horana Planations PLC) to continue our efforts to make plantation sustainable and eco-friendly."

Sri Lanka's is a niche producer of 'crepe' rubber which commands high prices in world markets.

The firm's timber and forestry cultivation has also been certified by the FSC.

The certification is given for "for managing and harvesting non-timber products from the raw material and rubber latex produced in our properties to minimise biodiversity loss and preserve sustainable rural life through responsible business practices," the firm said.

Horana Plantations had said it was increasing timber planting as prices for fuelwood rose.
Last year it had planted 29.5 hectares of timber trees and 55 hectares of rubber. Horana Plantations said rain reduced latex production last year to 1.4 million kilograms which was the lowest recorded "in many years."

"Despite the reduction in production, the Company recorded significant profits due to the strong market for Rubber in the world market and stringent management controls," Casie Chitty said.

The rubber prices at auctions in Colombo auction had increased from an average of 160 rupees to around 300 rupee levels by December 2009. The net sale average was 279.15 rupees per kilogram for 2009 up from 209.74 a year earlier.

Cost of production had increased to 208.16 per kilogram from 170.16 per kilo a year earlier, with labour and energy pushing up the total.

Gross profits from rubber had increased 71 percent to 102.3 million rupees from 59.6 million a year earlier.

"This sector is expected to perform consistently well in the future with the recovery from the global financial slump likely to renew and increase demand for rubber in the world market," Casie Chitty said.

The firm which also makes tea and small amounts of cinnamon posted net profits of 94 million rupees for the year ended March 2010 up from 55.2 million rupees a year earlier.

Gross revenues rose to 1.78 billion rupees from 1.38 billion rupees. The firm only paid 13.4 million rupees in management fees.

(lankabusinessonline.com)