Malaysian NR production falls 22% in Nov.

Malaysian NR production falls 22% in Nov.

KUALA LUMPUR (Jan. 14, 2011)—Production of natural rubber fell 22.3 percent in Malaysia in November 2010, to 73,100 metric tons, according to the latest figures from the Malaysian Department of Statistics.
However, for January-November 2010, production was still up 9,916 metric tons compared with the same period in 2009, the department said.
Malaysian NR exports were up 6.8 percent for the month and 28 percent for the year to date, the department said. China was Malaysia’s biggest customer, accounting for 53.2 percent of NR purchases; Germany, the next-biggest customer, was far behind with 9.1 percent.
The Malaysian government figures were in line with recent upheavals in the NR market, thanks to adverse weather conditions in Southeast Asia and increased demand, especially from China. NR prices have reached record highs; the Jan. 12 price of Standard Indonesian Rubber 20—the grade most often used by U.S. tire makers—was $2.41 per pound free on board, at the port of origin.



Spot rubber continues to gain

Kottayam, Jan. 14
Spot rubber prices concluded the session at an all-time high on Friday. According to observers, the market was following the gains in the trendsetting international markets which ruled around Rs 25 above the domestic market. “We are expecting the prices to reach the global levels once the tapping season is over,” a trader said.
Certain tyre manufacturers were active in the market. But the gap between the demand and supply was still wide since there were no quantity sellers even at these extraordinary levels.
Sheet rubber moved up to Rs 221 (220) a kg on fresh buying and short covering. The grade firmed up to Rs 220 (219) a kg both at Kottayam and Kochi, as reported by the Rubber Board. The National Multi Commodity was closed owing to Uttarayan.
RSS 3 (spot) increased further to Rs 247.34 (245.10) a kg at Bangkok. The grade improved at its January futures to ¥447.9 (Rs 245.61) from ¥444.5 a kg during the day session and then to ¥451 (Rs 247.30) in the night session on the Tokyo Commodity Exchange (TOCOM).
Spot rates were (Rs/kg): RSS-4: 221 (220); RSS-5: 209 (208); ungraded: 205 (204); ISNR 20: 217 (216) and latex 60 per cent: 151 (150).



World oil prices spike towards $100-per-barrel milestone

Oil is fast approaching $100 for the first time in two years, at the end of a momentous week which saw the market driven by the Brent contract's looming expiry, supply-side worries and falling US reserves.
Other major global commodity markets were also pushed higher by supply concerns. Coffee, maize, platinum, palladium and soya all forged multi-year peaks, while rubber stretched to a new record high.
OIL: London Brent oil surged to $99.20 a barrel late on Friday -- touching the highest level since October 1, 2008 -- and encroaching on the key psychological milestone of $100.
"London's benchmark Brent crude touched on highs above $99 ahead of February expiry on Friday," VTB Capital analyst Andrey Kryuchenkov told AFP.
"It is because it's the last day of trading for the February contract, and the market is rolling into March," he added, and also cited volatile light trading volumes. March becomes the front-month contract next week.
In recent days and weeks, oil prices have been catapulted higher as recent freezing winter weather stoked hopes of rising energy demand in Europe and elsewhere.
The market has also been propelled by the weaker dollar, supply problems and falling energy reserves in the United States.
On Wednesday, Brent oil had leapt close to 99 dollars, boosted as the key Trans-Alaskan pipeline remained shut following a leak that struck over the weekend.
The key link reopened on Thursday, dampening sentiment, but some analysts still predict that oil will strike $100 in the near future.
"The recent rise in crude oil prices has prompted some speculation that we could well see $100 prices quite soon," said CMC Markets analyst Michael Hewson.
He added: "Brent crude pushed close to $100 on increased consumption on the back of the cold winter weather in Europe and a supply glut of (New York crude) which has depressed the US price, allowing the European price to surge ahead of its US counterpart."
In earlier deals on Friday, prices fell as traders had digested fresh moves by China, the world's biggest energy user, to curb its high inflation, analysts said.
Traders had reacted to China's announcement that its central bank planned to raise the amount of money that lenders are required to keep in reserve as the Asian nation seeks to rein in its high inflation.
The bank reserve requirement ratio would be raised by 50 basis points beginning on January 20, the People's Bank of China said in a statement.
By Friday afternoon on London's Intercontinental Exchange, Brent North Sea crude for delivery in February leapt to $98.65 a barrel from $94.16 a week earlier.
On the New York Mercantile Exchange, Texas light sweet crude for February, rallied to $91.23 a barrel from $89.26.
PRECIOUS METALS: Palladium enjoyed the most impressive run this week to strike 823.95 for the first time since March 2001, before easing on profit-taking. Platinum meanwhile hit the best level since July 2008.
"Hopes for the global automotive recovery and China's rising demand for autocatalytic converters for petrol engines continue to drive platinum group metals higher, especially palladium," added Kryuchenkov.
Elsewhere, metals consultancy GFMS forecast this week that gold could hit record highs above $1,600 per ounce later this year, aided by low interest rates and stubborn concerns over the eurozone debt crisis.
"GFMS are expecting that towards the summer prices could start to move materially higher, with gold possibly breaking through $1,500 (per ounce) at that stage," GFMS said in its latest report.
"They also see an approach to or even a breach of $1,600 by late 2011/early 2012 as quite feasible."
Gold had hit a record 1,431.25 dollars on December 7, boosted by its safe-haven status as investors fretted over the eurozone crisis.
By late Friday on the London Bullion Market, gold was unchanged at $1,367 an ounce from a week earlier.
Silver fell to $28.27 an ounce from $28.39.
On the London Platinum and Palladium Market, platinum jumped to $1,811 an ounce from $1,735.
Palladium leapt to $795 an ounce from $754.
BASE METALS: Nickel was the star performer, hitting an eight-month pinnacle of 25,999 dollars per tonne on the back of supply-side factors, according to Barclays Capital analyst Gayle Berry.
"Prices have been receiving support and nearby spreads have tightened on concerns that heavy flooding in parts of Australia may affect production, and that an approaching cyclone has caused Societe Le Nickel (SLN) to suspend mining in five locations in New Caledonia," Berry said.
By late Friday on the London Metal Exchange (LME), copper for delivery in three months jumped to $9,640 a tonne from $9,448 a week earlier.
Three-month aluminium slid to $2,470 a tonne from $2,529.
Three-month lead rose to $2,668 a tonne from $2,627.
Three-month tin increased to $26,750 a tonne from $26,350 a week earlier.
Three-month zinc gained to $2,455 a tonne from $2,434.
Three-month nickel rallied to $25,747 a tonne from $24,510.
COCOA: Cocoa climbed in volatile trade as the market was beset by political uncertainty in key producer Ivory Coast.
Ivory Coast leader Alassane Ouattara on Friday demanded the use of force to oust strongman Laurent Gbagbo who has refused to cede power after disputed elections, speaking to a US think-tank via videolink.
"I believe seriously that force should be used to remove Mr. Gbagbo," Ouattara said in a message broadcast from Abidjan.
"This is clearly a situation of gross human rights violations," he said.
"I do not want bloodshed," Ouattara said. But Gbagbo, "at some stage has to know," that the situation is serious.
By Friday on LIFFE, London's futures exchange, cocoa for March jumped to �1,979 a tonne from �1,913 a week earlier.
On the New York Board of Trade (NYBOT), cocoa for delivery in March rose to $2,990 a tonne from $2,863 a week earlier.
COFFEE: Coffee prices soared to a 13-year peak in London and a two-year high in London on the back of limited supplies.
Arabica spiked to 244.50 cents per pound and Robusta touched 2,185 dollars on Wednesday, before profit-taking set in.
"Market fundamentals continue to be favourable to the support of high price levels," said the International Coffee Organisation in a market report.
"Adverse weather is still disrupting harvesting and transportation in many exporting countries and affecting short-term coffee supplies."
By Friday on NYBOT, Arabica for delivery in March was unchanged at 233.85 cents a pound from a week earlier.
On LIFFE, Robusta for March increased to $2,116 a tonne by Friday from $2,028 a week earlier.
SUGAR: Sugar futures pulled away from recent 30-year highs as many traders opted to take profits.
Late last month, the commodity had hit 34.77 US cents a pound in New York on the back of solid Asian demand, reaching a level last seen in 1981.
By Friday this week on NYBOT, the price of unrefined sugar for delivery in March dipped to 30.88 US cents a pound from 31.63 cents a week earlier.
On LIFFE, the price of a tonne of white sugar for March declined to �770.20 from �777.20 a week earlier.
GRAINS AND SOYA: Soya and maize hit their highest points since July 2008, boosted by scarce supplies. The two commodities rallied as high as $14.32 and $6.49 respectively, before retreating slightly.
"A series of supply disappointments have marred the global grains supply landscape over the past year on adverse weather, ranging from floods in Canada, Pakistan and more recently Australia to drought in Russia, Ukraine and Kazakhstan and dry weather in Argentina," said analyst Sudakshina Unnikrishnan at Barclays Capital.
"Lower supplies have been exacerbated by export restrictions and thin inventory levels in a positive demand environment."
By Friday on the Chicago Board of Trade, March-dated soyabean meal -- used in animal feed -- leapt to $14.09 a bushel from $13.65 a week earlier.
Maize for delivery in March gained to $6.38 a bushel from $5.95.
Wheat for March eased to $7.62 from $7.74.
RUBBER: Prices continued to break records, hitting new highs following positive regional futures markets, dealers said.
The Malaysian Rubber Board's benchmark SMR20 rallied to 527.50 US cents per kilo, from 506.45 cents a week earlier.



Natural rubber prices climb further to Rs 220/kg

Prices of natural rubber, key raw material for making tyres, in the domestic market rose to a fresh high of Rs 220 per kg following firm global cues.
The prices of natural rubber in the markets of Kottayam and Kochi, key trading centres of the commodity, closed at Rs 220 a kg compared to Rs 219.5 a kg yesterday.
According to industry sources, the rally in natural rubber prices is due to the surge in prices of the commodity in the international market.
Natural rubber prices in the global market touched a fresh high of Rs 247.3 per kg as strong demand from China and the US is fuelling the prices of commodity.
"International prices are at record high levels and are likely to remain at that levels in near future due to strong demand. Domestic prices are following the international trend," Indian Rubber Dealers Federation Treasurer Ibrahim Jalal has said.
A surge in demand from the US on the back of better-than-expected growth in the automotive segment is further pushing the global prices of the commodity and the impact is also felt on the domestic markets, said an expert.
Natural rubber prices have been on the rise for the past few months due to disruption of production in Kerala, which accounts for 90 per cent of the country's production, coupled with rally in international prices of the commodity.
However, the present rally in the prices of commodity is due to the global cues as the supply situation in the country has improved, Jalal said.
India's production of natural rubber in 2010 is estimated at around 8.5 lakh tonnes, whereas the total demand for natural rubber in the country is nearly 10 lakh tonnes per annum.



Spot rubber continues to gain


Kottayam, Jan. 14

Spot rubber prices concluded the session at an all-time high on Friday. According to observers, the market was following the gains in the trendsetting international markets which ruled around Rs 25 above the domestic market. “We are expecting the prices to reach the global levels once the tapping season is over,” a trader said.

Certain tyre manufacturers were active in the market. But the gap between the demand and supply was still wide since there were no quantity sellers even at these extraordinary levels.

Sheet rubber moved up to Rs 221 (220) a kg on fresh buying and short covering. The grade firmed up to Rs 220 (219) a kg both at Kottayam and Kochi, as reported by the Rubber Board. The National Multi Commodity was closed owing to Uttarayan.

RSS 3 (spot) increased further to Rs 247.34 (245.10) a kg at Bangkok. The grade improved at its January futures to ¥447.9 (Rs 245.61) from ¥444.5 a kg during the day session and then to ¥451 (Rs 247.30) in the night session on the Tokyo Commodity Exchange (TOCOM).

Spot rates were (Rs/kg): RSS-4: 221 (220); RSS-5: 209 (208); ungraded: 205 (204); ISNR 20: 217 (216) and latex 60 per cent: 151 (150).



Cos reduce natural rubber consumption

KOCHI: The sustained rise in natural rubber prices is slowly affecting it consumption. Substitution of natural rubber by synthetic rubber and the new trends in the transportation sector could be the reasons for this change.
Consumption of natural rubber by all user industries fell by 3% in November 2010. Provisional figures show that in December it fell by 1.3%.
The consumption by tyre sector saw a 4.3% fall in November and a 3% fall in December, pointing towards a similar substitution of natural rubber by synthetic. “Earlier, we used to consume 74% natural rubber and 26% synthetic rubber,” said Rajiv Budhraja, director general, Automotive Tyre Manufacturers Association.



Farmers too see a bright futures in trade

As you enter Asia’s biggest market yard in Unjha, also the country’s jeera hub, a group of young farmers toying with glitzy palm-sized cell phones would brief you on the prices of this sensitive commodity. A couple of them drive new variants of small-cars and some bring laptops to do futures transactions. After all, they want to be a part of price formation rather than just be a producer.
“We have learned the factors leading to price discovery in commodity futures market. And here we are to make it big,” says Bhavik Patel, 29, a traditional jeera producer. Patel’s only aim is to shine out among the traditional traders in town. Although his father is critical about it, he says, “They will soon understand the new-age money making platform.” Patel is also helping folks who are his father’s age understand the concept through a graph on his laptop screen.
The sky-high prices of most commodities in the recent scenario have triggered a section of producers, especially the next gen, in the commodity hubs to take active participation in the futures market. Producers in Kottayam, the natural rubber hub in Kerala, are getting actively involved in group trading to increase exposure to futures market. The interest is significant among many producers. “We can see a rise in participation of natural rubber producers in the exchange. This way, the trading volume also gets a boost,” said Anil Mishra, CEO of National Multi Commodity Exchange. He added that the volume of trading in natural rubber had gone up by three times—to Rs 300 crore a day against Rs 100 crore just a few months back. Although, the spike in trading volume has been largely driven by demand-supply mismatch.
Similarly, its not just the 50 dehydrated onion processors who are making moolah in the small town of Mahuva, Gujarat, the dehydrated onion hub of India. Following the sharp rise in onion prices due to uneven rains a lot of interest has been generated among the small producers. “It becomes easy for us to draw an inception about the price level because we can partially predict the production and crop estimates,” says Dahyabhai Raval, an onion producer.
Sugarcane producers in Barabanki, Uttar Pradesh, don’t want to miss the ongoing rally in sugar prices. Futures’ trading in sugar has started again after 18 months in December end. The government had banned sugar futures trading to control rising prices.
Technology too has been playing its part. If some producers are left behind, they are informed through SMSes. Small innovators are providing solutions to farmers for SMS alerts on rainfall, crop size, international prices, market yard stocks and et al. Such information has increased the interest of producers in the futures market in the last few months. “On the basis of demand and market potentials, we provide unique voice as well as text messages on market prices that helps the producers decide on price movements,” says Ranjan Sharma, founder of IKSL.
Additionally, commexes are holding awareness programmes to provide market-related information on futures market and the benefits for farmers. “We have been conducting awareness camps in most parts of the country to make them understand about the nitty-gritty of this market,” says Mr Mishra. However, farmers’ risk-taking capacity is going up, backed up by easy availability of funds and an increase in number of brokerage houses that advise on various issues.
For the last few months, even the brokerage houses have seen a surge in overall subscription from these commodity producing regions. “The farmers in such commodity hubs are relatively richer than other places and they can afford to place sizable orders in the futures market,” says Ketan Marwadi, CMD of Marwadi Stock Broking. The brokerage house has recorded a rise of 25% in the last six months, a partial size has been contributed by big villages due to better rains and crop returns.
Ever since the futures exchange commenced operations in early 2000, a large section led by farmers has been criticizing it and calling it a machine for hiking prices. They claim that the prices don’t move due to fundamental reasons but due to a traders’ section and aggregators. To an extent it is true as well, believe experts. But the supporters of futures trading have argued that there is no way inflation is being triggered by this market. In contrast, it has been supporting the prices up to provide better returns to farmers. However, the only way farmers can benefit is through some transmission mechanism from the futures market to spot prices, says an expert.
Also, due to easy availability from banks, the average capacity for any producer to hold a commodity has gone up. It has also given them an equal opportunity to trade in the exchange and put their call. Commodity analysts predict that valuable commodities would see a steep rise in prices which is an attraction point for many. The disconnect between the physical market, farmers and the futures market is gradually making a connect.