Spot rubber rules steady
Kottayam, June 8
Spot rubber continued to rule almost steady on Tuesday. According to observers, the market activities were in an extremely low key as the domestic rubber futures turned weak on NMCE.
Sheet rubber finished flat at Rs 168.00 a kg amidst scattered transactions. The trend was partially mixed as ISNR 20 weakened on low demand.
Futures weaken
RSS 4 weakened with the June futures rising to Rs 167.60 (168.47), July to Rs164.10 (164.69), August to Rs 158.40 (158.79) and September to Rs 154.40 (154.99) a kg on the National Multi Commodity Exchange. The June futures for RSS 3 improved to ¥351.0 / Rs180.12 (¥345.0), July to ¥343.6 (¥340.7), August to ¥316.8 (¥312.0), September to ¥289.0 (¥284.0), October to ¥267.1 (¥262.4) and November to ¥262.1 (¥257.3) a kg during the day session on Tokyo Commodity Exchange.
RSS 3 (spot) firmed up to Rs 169.14 (168.05) a kg at Bangkok.
Spot rubber rates (Rs/kg) were: RSS-4:168 (168); RSS-5:165 (165); ungraded:163 (163); ISNR 20: 150 (151.50) and latex 60%: 110.50 (110.50).
Wednesday, June 9, 2010
Tuesday, June 8, 2010
Rubber Climbs From Three-Week Low as Yen’s Drop Boosts Appeal
Rubber Climbs From Three-Week Low as Yen’s Drop Boosts Appeal
Posted: 08 Jun 2010 01:26 AM PDT
June 8 (Bloomberg) -- Rubber rebounded from a three-week low as a drop in the Japanese currency against the dollar raised the appeal of yen-denominated contracts and investors’ concerns about the European fiscal crisis eased.
Futures in Tokyo climbed as much as 1.7 percent after slumping 6.1 percent yesterday, the most since May 7. The yen weakened against all of its most-traded counterparts as Asian equities ended two days of losses.
The dollar gained and Asian stocks advanced after Federal Reserve Chairman Ben S. Bernanke said that the U.S. recovery is moving at a “moderate” pace and he sees consumers in the world’s largest economy “coming back.” The euro rose, after reaching a four-year low against the dollar yesterday, amid speculation it has fallen too rapidly.
“Rubber recovered as selling spurred by European debt concern subsided,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone. “Buying was not active as concern about economic recovery remains,” Shigemoto said.
Rubber for November delivery, the most-active contract, added 0.5 percent to 258.7 yen per kilogram ($2,822 a metric ton) on the Tokyo Commodity Exchange at 12:14 p.m. local time. Earlier, the price fell to 255.8 yen, the lowest since May 18.
Yen Declines
The yen fell to 91.68 per dollar at 12:18 p.m. Tokyo time from 91.37 in New York. The U.S. economic recovery is “moderate-paced” and started late last summer, Bernanke said yesterday, boosting investor confidence after concern over Europe’s debt crisis drove benchmark U.S. stock indexes to seven-month lows. Most Asian stocks rose, helping the MSCI Asia Pacific Index gain 0.4 percent.
In Thailand, the world’s largest exporter, the free-on- board price of RSS-3 grade rubber for July delivery fell 2.1 percent to 117.1 baht a kilogram, the Rubber Institute of Thailand said yesterday on its website. The group, which reviews prices once a day, will issue new data in the afternoon. The price rose to a record 130.55 baht on April 27.
Thailand may increase a levy on natural-rubber exports to promote processing and stabilize local prices, according to a deputy minister.
The revised levy may range from 0.9 baht ($0.03) to 5 baht a kilogram based on a sliding scale of free-on-board prices, Supachai Phosu, deputy minister of agriculture and cooperatives, said in an interview yesterday. The existing levy ranges from 0.9 baht a kilo to 1.4 baht. Should the cabinet approve the revised rates they will start on Oct. 1, Supachai said by phone.
September-delivery rubber on the Shanghai Futures Exchange added 5 yuan to 20,630 yuan ($3,020) a ton at 11:20 a.m. local time.
(bloomberg.com)
China’s Stocks Rise From 13-Month Low as Automakers Advance
Posted: 08 Jun 2010 01:24 AM PDT
By Bloomberg News
June 8 (Bloomberg) -- China’s stocks rose, with the benchmark index advancing from a 13-month low, as consumer and technology companies gained on speculation their earnings will be most shielded from a slowdown in economic growth.
SAIC Motor Co. gained 1.1 percent as sales increased. Shaanxi Broadcast & TV Network Intermediary Co. jumped 10 percent after the Shanghai Securities News said the government will announce trials for merging media networks. Bank of China Ltd. slumped for a fifth day on concern fundraising will hurt shareholders’ stakes.
“Markets are very challenging at the moment,” Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada, said in a Bloomberg Television interview. “We think the best approach is just to wait it out to see how things develop in the next few months before you take on a lot of risk.”
The Shanghai Composite Index fluctuated between gains and losses before closing 0.1 percent higher at 2,513.95, rising from its lowest close since April 30, 2009. The CSI 300 Index added 0.1 percent to 2,699.34, with a measure of consumer discretionary stocks advancing the most.
The Shanghai index has retreated 24 percent this year, Asia’s worst performing market, on concern the property market is cooling and Europe’s debt threatens China’s exports.
SAIC gained 1.1 percent to 12.41 yuan after saying sales last month advanced 26 percent from a year earlier. FAW Car Co. added 2.1 percent to 16.28 yuan. Beiqi Foton Motor Co. rose 1.8 percent to 17.25 yuan.
Auto Sales
China’s passenger-car sales have risen every month since February 2009 after the government halved the consumption tax on small vehicles to 5 percent the preceding month, according to separate data from the China Association of Automobile Manufacturers. The tax was increased to 7.5 percent this year.
China is moving from growth led by exports to one driven by domestic consumption and investors can benefit by buying shares of multinationals with “exposure” to the country and selling industrial metal producers, according to Bank of America-Merrill Lynch Global Research.
Rising salaries are also “positive” for household spending, Royal Bank of Canada’s Jackson said.
Honda Motor Co. suffered its second strike in China in less than a month as workers at a plant partly owned by affiliate Yutaka Giken Co. walked out demanding higher pay, forcing the parts maker to close the factory. Foxconn Technology Group, which manufactures Apple Inc. iPhones, announced the base wage for factory workers in Shenzhen will double after worker suicides.
Broadcast Stocks
Demands for higher wages are fast becoming an issue in China and companies need to get used to it, said Jun Ma, an economist at Deutsche Bank AG.
Shaanxi Broadcast jumped by the 10 percent daily limit to 9.47 yuan. Huawen Media Investment Corp. rose 10 percent to 6.07 yuan and Chengdu Dr Peng Telecom & Media Group Co. also gained 10 percent to 9.94 yuan.
Broadcasters will be in charge of constructing the networks, the Shanghai Securities News reported. Telecom companies will be allowed to produce radio and TV programming, the newspaper reported, citing rules released by the State Council the beginning of this year.
Gains were limited as BofA Merrill Lynch Global Research cut their recommendations on China and Hong Kong stocks to “neutral” from “overweight” on speculation that policy easing may be “far away” and growth expectations will continue to fall.
China is now the most “overbought” market in Asia while its yield curve has narrowed “sharply” to 102 basis points from 160 basis points in mid-April, strategists led by Sadiq Currimbhoy said in a report dated yesterday.
Slowing Growth
The U.S. supplanted China and Brazil as the most attractive market for investors as confidence in the global economic recovery wanes in the wake of the Greek debt crisis, according to a pool of investors and analysts who are Bloomberg users.
China’s economic growth may slip to between 10 percent and 11 percent this quarter as industrial production and investment expand at a slower pace, a researcher for the cabinet said.
“The 11.9 percent growth rate in the first quarter won’t be sustained and the outlook for investment and export growth is uncertain,” Zhang Liqun, a researcher at the State Council’s Development and Research Center, said yesterday on the sidelines of an economic forum in Beijing.
Bank of China, the nation’s third-largest lender, slid 1.1 percent to 3.51 yuan. The stock has lost 14 percent since June 2 when the bank started selling 40 billion yuan ($5.9 billion) of convertible bonds to replenish capital drained by record credit growth last year.
The following stocks also rose or fell in China trading. Stock symbols are in parentheses after company names:
Shandong Blue Sail Plastic & Rubber Co. (002382 CH), a glove maker, rose 3.3 percent to 38.10 yuan. Citic Securities Co. recommended investors accumulate the stock, saying sales will accelerate.
Tsingtao Brewery Co. (600600 CH), China’s biggest brewery by market value, gained 1.2 percent to 36 yuan. The company may buy Foster’s brewing business, the Beijing-based Economic Observer reported on its website today, citing an unidentified person. Liz McLachlan, a Melbourne-based spokeswoman for Foster’s, declined to comment on the report when contacted.
(indiainfoline.com)Search Amazon.com Computers for
Spot rubber prices ends unchanged
Posted: 08 Jun 2010 01:22 AM PDT
The spot rubber prices ended unchanged on Monday (07 June 2010). Sharp declined in the leading international indices failed to make any impact there as there were no quantity sellers on any grade fearing short supplies. Sheet rubber ended steady at Rs 168 per kg.
The June futures for RSS 4 rose to Rs 168.49 (167.83), July to Rs 164.90 (162.99), August to Rs 158.97 (157.15) and September to Rs 154.99 (153.75) a kg on the National Multi Commodity Exchange.
Spot rates were (Rs/kg): RSS-4: 168 (168); RSS-5: 165 (165); ungraded: 163 (163); ISNR 20: 151.50 (151.50) and latex 60 per cent: 110.50 (110.50).
(indiainfoline.com)
Posted: 08 Jun 2010 01:26 AM PDT
June 8 (Bloomberg) -- Rubber rebounded from a three-week low as a drop in the Japanese currency against the dollar raised the appeal of yen-denominated contracts and investors’ concerns about the European fiscal crisis eased.
Futures in Tokyo climbed as much as 1.7 percent after slumping 6.1 percent yesterday, the most since May 7. The yen weakened against all of its most-traded counterparts as Asian equities ended two days of losses.
The dollar gained and Asian stocks advanced after Federal Reserve Chairman Ben S. Bernanke said that the U.S. recovery is moving at a “moderate” pace and he sees consumers in the world’s largest economy “coming back.” The euro rose, after reaching a four-year low against the dollar yesterday, amid speculation it has fallen too rapidly.
“Rubber recovered as selling spurred by European debt concern subsided,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone. “Buying was not active as concern about economic recovery remains,” Shigemoto said.
Rubber for November delivery, the most-active contract, added 0.5 percent to 258.7 yen per kilogram ($2,822 a metric ton) on the Tokyo Commodity Exchange at 12:14 p.m. local time. Earlier, the price fell to 255.8 yen, the lowest since May 18.
Yen Declines
The yen fell to 91.68 per dollar at 12:18 p.m. Tokyo time from 91.37 in New York. The U.S. economic recovery is “moderate-paced” and started late last summer, Bernanke said yesterday, boosting investor confidence after concern over Europe’s debt crisis drove benchmark U.S. stock indexes to seven-month lows. Most Asian stocks rose, helping the MSCI Asia Pacific Index gain 0.4 percent.
In Thailand, the world’s largest exporter, the free-on- board price of RSS-3 grade rubber for July delivery fell 2.1 percent to 117.1 baht a kilogram, the Rubber Institute of Thailand said yesterday on its website. The group, which reviews prices once a day, will issue new data in the afternoon. The price rose to a record 130.55 baht on April 27.
Thailand may increase a levy on natural-rubber exports to promote processing and stabilize local prices, according to a deputy minister.
The revised levy may range from 0.9 baht ($0.03) to 5 baht a kilogram based on a sliding scale of free-on-board prices, Supachai Phosu, deputy minister of agriculture and cooperatives, said in an interview yesterday. The existing levy ranges from 0.9 baht a kilo to 1.4 baht. Should the cabinet approve the revised rates they will start on Oct. 1, Supachai said by phone.
September-delivery rubber on the Shanghai Futures Exchange added 5 yuan to 20,630 yuan ($3,020) a ton at 11:20 a.m. local time.
(bloomberg.com)
China’s Stocks Rise From 13-Month Low as Automakers Advance
Posted: 08 Jun 2010 01:24 AM PDT
By Bloomberg News
June 8 (Bloomberg) -- China’s stocks rose, with the benchmark index advancing from a 13-month low, as consumer and technology companies gained on speculation their earnings will be most shielded from a slowdown in economic growth.
SAIC Motor Co. gained 1.1 percent as sales increased. Shaanxi Broadcast & TV Network Intermediary Co. jumped 10 percent after the Shanghai Securities News said the government will announce trials for merging media networks. Bank of China Ltd. slumped for a fifth day on concern fundraising will hurt shareholders’ stakes.
“Markets are very challenging at the moment,” Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada, said in a Bloomberg Television interview. “We think the best approach is just to wait it out to see how things develop in the next few months before you take on a lot of risk.”
The Shanghai Composite Index fluctuated between gains and losses before closing 0.1 percent higher at 2,513.95, rising from its lowest close since April 30, 2009. The CSI 300 Index added 0.1 percent to 2,699.34, with a measure of consumer discretionary stocks advancing the most.
The Shanghai index has retreated 24 percent this year, Asia’s worst performing market, on concern the property market is cooling and Europe’s debt threatens China’s exports.
SAIC gained 1.1 percent to 12.41 yuan after saying sales last month advanced 26 percent from a year earlier. FAW Car Co. added 2.1 percent to 16.28 yuan. Beiqi Foton Motor Co. rose 1.8 percent to 17.25 yuan.
Auto Sales
China’s passenger-car sales have risen every month since February 2009 after the government halved the consumption tax on small vehicles to 5 percent the preceding month, according to separate data from the China Association of Automobile Manufacturers. The tax was increased to 7.5 percent this year.
China is moving from growth led by exports to one driven by domestic consumption and investors can benefit by buying shares of multinationals with “exposure” to the country and selling industrial metal producers, according to Bank of America-Merrill Lynch Global Research.
Rising salaries are also “positive” for household spending, Royal Bank of Canada’s Jackson said.
Honda Motor Co. suffered its second strike in China in less than a month as workers at a plant partly owned by affiliate Yutaka Giken Co. walked out demanding higher pay, forcing the parts maker to close the factory. Foxconn Technology Group, which manufactures Apple Inc. iPhones, announced the base wage for factory workers in Shenzhen will double after worker suicides.
Broadcast Stocks
Demands for higher wages are fast becoming an issue in China and companies need to get used to it, said Jun Ma, an economist at Deutsche Bank AG.
Shaanxi Broadcast jumped by the 10 percent daily limit to 9.47 yuan. Huawen Media Investment Corp. rose 10 percent to 6.07 yuan and Chengdu Dr Peng Telecom & Media Group Co. also gained 10 percent to 9.94 yuan.
Broadcasters will be in charge of constructing the networks, the Shanghai Securities News reported. Telecom companies will be allowed to produce radio and TV programming, the newspaper reported, citing rules released by the State Council the beginning of this year.
Gains were limited as BofA Merrill Lynch Global Research cut their recommendations on China and Hong Kong stocks to “neutral” from “overweight” on speculation that policy easing may be “far away” and growth expectations will continue to fall.
China is now the most “overbought” market in Asia while its yield curve has narrowed “sharply” to 102 basis points from 160 basis points in mid-April, strategists led by Sadiq Currimbhoy said in a report dated yesterday.
Slowing Growth
The U.S. supplanted China and Brazil as the most attractive market for investors as confidence in the global economic recovery wanes in the wake of the Greek debt crisis, according to a pool of investors and analysts who are Bloomberg users.
China’s economic growth may slip to between 10 percent and 11 percent this quarter as industrial production and investment expand at a slower pace, a researcher for the cabinet said.
“The 11.9 percent growth rate in the first quarter won’t be sustained and the outlook for investment and export growth is uncertain,” Zhang Liqun, a researcher at the State Council’s Development and Research Center, said yesterday on the sidelines of an economic forum in Beijing.
Bank of China, the nation’s third-largest lender, slid 1.1 percent to 3.51 yuan. The stock has lost 14 percent since June 2 when the bank started selling 40 billion yuan ($5.9 billion) of convertible bonds to replenish capital drained by record credit growth last year.
The following stocks also rose or fell in China trading. Stock symbols are in parentheses after company names:
Shandong Blue Sail Plastic & Rubber Co. (002382 CH), a glove maker, rose 3.3 percent to 38.10 yuan. Citic Securities Co. recommended investors accumulate the stock, saying sales will accelerate.
Tsingtao Brewery Co. (600600 CH), China’s biggest brewery by market value, gained 1.2 percent to 36 yuan. The company may buy Foster’s brewing business, the Beijing-based Economic Observer reported on its website today, citing an unidentified person. Liz McLachlan, a Melbourne-based spokeswoman for Foster’s, declined to comment on the report when contacted.
(indiainfoline.com)Search Amazon.com Computers for
Spot rubber prices ends unchanged
Posted: 08 Jun 2010 01:22 AM PDT
The spot rubber prices ended unchanged on Monday (07 June 2010). Sharp declined in the leading international indices failed to make any impact there as there were no quantity sellers on any grade fearing short supplies. Sheet rubber ended steady at Rs 168 per kg.
The June futures for RSS 4 rose to Rs 168.49 (167.83), July to Rs 164.90 (162.99), August to Rs 158.97 (157.15) and September to Rs 154.99 (153.75) a kg on the National Multi Commodity Exchange.
Spot rates were (Rs/kg): RSS-4: 168 (168); RSS-5: 165 (165); ungraded: 163 (163); ISNR 20: 151.50 (151.50) and latex 60 per cent: 110.50 (110.50).
(indiainfoline.com)
Spot rubber prices rule firm
Spot rubber prices rule firm
Kottayam, June 7
Physical rubber prices finished unchanged on Monday. Sharp declines in the leading international indices failed to make any impact there as there were no quantity sellers on any grade fearing short supplies.
Sheet rubber closed steady at Rs 168 a kg as in the previous session. The volumes were dull. The June futures for RSS 4 improved to Rs 168.49 (167.83), July to Rs 164.90 (162.99), August to Rs 158.97 (157.15) and September to Rs 154.99 (153.75) a kg on the National Multi Commodity Exchange.
RSS 3 declined at its June futures to ¥345.0 / Rs176.66 (¥ 357.9), July to ¥340.7 (¥353.2), August to ¥312.0 (¥326.7), September to ¥284.0 (¥ 299.6), October to ¥ 262.4 (¥ 277.6) and November to ¥ 257.3 (273.9) a kg during the day session on the Tokyo Commodity Exchange.
The June futures recovered partially to ¥ 350.0 (Rs179.22), July to ¥ 341.5, August to ¥ 313.3 September to ¥ 285.4, October to ¥263.7 and November to ¥258.7 a kg on late trades. RSS 3 (spot) weakened to Rs 168.05 (171.24) a kg at Bangkok.
Spot rates (Rs/kg) were: RSS-4: 168 (168); RSS-5:165 (165); ungraded:163 (163); ISNR 20:151.50 (151.50) and Latex 60 per cent :110.50 (110.50)
Rubber Tumbles to Two-Week Low on Europe Debt Crisis, Oil Dip
Posted: 06 Jun 2010 10:30 PM PDT
By Supunnabul Suwannakij
June 7 (Bloomberg) -- Rubber tumbled to the lowest level in two weeks on concern the European debt crisis may slow the global economic recovery, weakening demand for the commodity used to make tires.
Futures in Tokyo plunged as much as 6.5 percent to 256 yen a kilogram ($2,809 a metric ton), the lowest level since May 21. The price fell 3.8 percent last week, the biggest drop since the week ended May 7, on increased output from Thailand and concern that Chinese demand may decline.
Crude oil dropped for a second day amid investor’s fear Europe’s debt crisis will widen and after the U.S. added fewer jobs than forecast last month, suggesting energy demand may be slow to recover. The euro fell to its weakest level since November 2001 versus the yen.
“The main factor for the sharp fall today is because of stronger yen, triggered by the euro collapse,” said Kazunori Kokubo, general manager for International Business Department of commodity broker Yutaka Shoji Ltd. “Other commodities, especially oil, also came down so sharply. That reflects concerns over impact of the Europe’s debt problems.”
Rubber for November delivery, the most-active contract, declined 16 yen, or 5.8 percent, to 257.9 yen per kilogram on the Tokyo Commodity Exchange as of 11:36 a.m. in Tokyo.
September-delivery rubber on the Shanghai Futures Exchange declined the 5 percent daily limit to 20,560 yuan ($3,011) a ton, the lowest level since Nov. 13, 2009.
China’s sales of cars, sport-utility vehicles and multipurpose vehicles rose 25 percent in May from a year earlier, compared with growth of 34 percent in April, the China Automotive Technology & Research Center said June 1.
Thai Supplies
“Oil’s decline spilled over to the rubber market,” Chaiwat Muenmee, an analyst at broker DS Futures Co., said by phone from Bangkok. Rubber often tracks oil prices as the rival synthetic product is made from petroleum.
Crude oil for July delivery lost 2.4 percent to $69.83 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 4.2 percent on June 4 after the Labor Department said that payrolls rose by 431,000 in May. Economists projected a 536,000 gain, according to the median forecast in a Bloomberg News survey.
Cash prices of natural rubber in Thailand, the top exporter, may decline as production increases this month, the Thai Rubber Association said last week.
Production may exceed 200,000 tons a month in June and July, as much as 30 percent more than the low-output period in April and May, the group’s President Luckchai Kittipol said June 2. Output this year may be 3.2 million tons, matching 2009, he said.
The free-on-board price of Thai RSS-3 grade rubber for July delivery, which excludes freight and insurance, dropped 1.6 percent June 4 to 119.65 baht ($3.66) a kilogram, the Rubber Institute of Thailand said on its website. The prices will be updated at about noon local time.
(bloomberg.com)
U.S. Auto Sales Up but China Slowed Down
Posted: 06 Jun 2010 10:27 PM PDT
7 June 2010 - U.S. auto sales in May rose for the seventh consecutive month as most car makers recorded robust gains on the back of rising consumer confidence.
Growing purchases by business owners, renewed popularity for some large trucks and sport utility vehicles, recent decline in the price of gasoline and higher purchases by rental car companies contributed to the strength of the U.S. auto sales in May.
General Motors Co. reported a 17% year-over-year rise in monthly sales to 223,410 cars and light trucks. Ford Motor Co. posted a 22% rise to 162,813, whilst Chrysler Group LLC a 33% rise to 104,819.
For the makers of Japanese cars in the U.S, Toyota Motor Corp. reported a 6.7% rise for May to 162,813 vehicles. Honda Motor Co. posted May sales of 105,407, an increase of 18.6% from May 2009 while Nissan Motor Corp. said its sales in May increased by 24% to 83,764 units.
Korea’s Hyundai Motor Co. matched Chrysler’s growth rate, as its sales also increased 33% to 49,045 vehicles.
Despite the gains recorded during the last seven months, vehicle makers were cautious about its sustainability citing recent declines in the stock market and the Euro-zone debt crisis as potential threats.
In China, however, auto sales slowed down last month as falling stock prices and rising consumer prices eroded wealth in the world’s largest automobile market.
China auto sales for May rose 25% to 885,800 units for cars, sport-utility vehicles and multipurpose vehicles, compared with 34% in April.
(Irco.biz)
Strong commodity prices dampened by European debt crisis
Posted: 06 Jun 2010 07:42 PM PDT
On the global front, cocoa prices on both London and New York markets are experiencing new rallies due to shrinking stockpiles and tight supplies for chocolate ingredients despite higher demand.
Cocoa stockpiles in the warehouses monitored by US ICE Futures are at the lowest since March 24.
Last Friday, cocoa on ICE Futures for July delivery touched a high of US$3,065 per tonne – the highest recorded since May 11 – before closing at US$3,048 per tonne.
Similarly, the commodity advanced to £2,567 a tonne on the Liffe exchange in London, the highest price since at least 21 years ago.
CPO
After touching a high of RM2,700 per tonne in May, CPO has gradually come down to trade below RM2,500 per tonne currently.
CPO, which takes its cue from the lower crude oil and soybean prices, also had to succumb to higher stock build-up and lower offtake from major overseas buyers.
In the coming months, market players feared that local palm oil stocks would increase further, particularly in September and October, being seasonally high production periods for the year.
Malaysian Estate Owners Association president Boon Weng Siew said CPO was not likely to touch RM3,000 per tonne this year, on expectation of further increase in palm oil stocks for the rest of 2010.
“Should crude oil prices fall below US$70 per barrel, CPO prices are expected to come down further,” he added. Palm oil biodiesel is a substitute for fossil fuel.
To ensure stability in CPO prices, Boon said that Malaysia needed to speed up the implementation of its mandatory biodiesel programme. “We must quickly take some of the high palm oil stocks for biodiesel production,” he said.
Tin
Tin prices on the Kuala Lumpur Tin Market so far this year have fared better than in 2009. On average, the commodity has been trading at the US$17,000 per tonne level. It touched a high of US$18,666 per tonne in April before coming down to US$17,500 per tonne last Friday.
A tin analyst said tin prices would stay strong at current levels but “will not reach the all-time high at US$24,040 per tonne recorded in 2008.”
There is still fear over supply tightness. This is view of the ongoing move by Indonesia, the world’s largest tin exporter, to clamp down on illegal mining and depletion of onshore mines at its Bangka-Belitung islands off Sumatra after centuries of unregulated mining, the analyst said.
On the local front, the latest interesting development is the Perak government’s intention to revive tin mining operations in the state and potential review of its mining policy.
(biz.thestar.com.my)
Growers oppose natural rubber import duty cuts
Posted: 06 Jun 2010 07:38 PM PDT
By Lakshmi Krishnakumar
New Delhi, June 6 (IANS) Young farmers in northeast India are a concerned lot after the Delhi High Court asked the government to “consider carefully” the user industry’s demand to bring down import duty on natural rubber - a move that they feel can disturb peace.
“Bringing down the import duty will adversely affect us farmers. We are small growers and not capitalists. We depend on larger inputs from a small area of cultivation,” said John Millik, 26, a farmer from Karbi Anglong district of Assam.
The May 17 high court order came on a petition filed by the Indian Cycle and Rickshaw Tyre Manufacturers Association, the Automotive Tyre Manufacturers Association and the All India Rubber Industries Association.
They urged the court to ask the government to regulate natural rubber prices by removing duties, fixing a price band and banning futures trade in the commodity. They also want the import duty on natural rubber to be brought down from 20 percent to 7 percent.
Millik feels that along with economic growth and development, rubber has helped curb separatism and insurgency to an extent in the region.
“Most youths are unemployed, illiterate and poor, and are easily persuaded to hold arms. But with cultivation that is sustaining and rewarding like rubber, extremism has come down to a certain level.
“Prospects of rubber plantation motivated us to take up this cultivation and I think the trend will grow, if the prices do not fall,” he said.
However, ATMA is pressing ahead with its demand, arguing that the import duty on finished product should be higher than the raw material itself.
An ATMA official said: “Usually the import duty on finished product is higher than the raw material but here the import duty on natural rubber (raw material) is 20 percent while on tyre (finished product) is only 10 percent.
“If that is not possible, then we demand the import duty on tyre to be increased,” he added.
The rubber growers have slammed the user industry’s demands.
The Indian Rubber Growers Association (IRGA) general secretary and vice chairman of the Rubber Board, Siby Monipally, told IANS that this was an attempt by the user-industry to regain supremacy in the rubber market to dictate prices to its advantage.
“They don’t want market forces to play its role. This is with an ulterior motive to damage rubber industry and interests of farmers in India,” Monipally said.
“Take the example of Kerala. Rubber is a Rs.10,000 crore industry there. Kerala was not affected by the global meltdown due to rubber cultivation. We have also recorded inclusive growth in the northeast,” he said.
The secretary and founder of the Mendhpather Multipurpose Cooperative Society in Meghalaya, sister Rose Kayathinkara, said: “I initiated rubber cultivation in Garo Hills. The development we have witnessed has been steady and progressive. The import duty in no way should be brought down.
“The youth here has suffered a lot from poverty and unemployment and they end up being part of extremist groups but rubber cultivation has helped them think different and has generated employment and income to many,” she added.
There are an estimated 1.4 million farmers in India and almost seven million households that benefit from the cultivation indirectly generating employment opportunities.
“Rubber plantation has a gestation period of at least seven years. So for the growth level to be sustained, the market prices have to be favourable to small growers,” Monipally said.
Members of IRGA and the rubber board will meet Prime Minister Manmohan Singh and Commerce Minister Anand Sharma with requests to maintain import duty at 20 percent and not ban futures trading on natural rubber.
(thaindian.com)
Kottayam, June 7
Physical rubber prices finished unchanged on Monday. Sharp declines in the leading international indices failed to make any impact there as there were no quantity sellers on any grade fearing short supplies.
Sheet rubber closed steady at Rs 168 a kg as in the previous session. The volumes were dull. The June futures for RSS 4 improved to Rs 168.49 (167.83), July to Rs 164.90 (162.99), August to Rs 158.97 (157.15) and September to Rs 154.99 (153.75) a kg on the National Multi Commodity Exchange.
RSS 3 declined at its June futures to ¥345.0 / Rs176.66 (¥ 357.9), July to ¥340.7 (¥353.2), August to ¥312.0 (¥326.7), September to ¥284.0 (¥ 299.6), October to ¥ 262.4 (¥ 277.6) and November to ¥ 257.3 (273.9) a kg during the day session on the Tokyo Commodity Exchange.
The June futures recovered partially to ¥ 350.0 (Rs179.22), July to ¥ 341.5, August to ¥ 313.3 September to ¥ 285.4, October to ¥263.7 and November to ¥258.7 a kg on late trades. RSS 3 (spot) weakened to Rs 168.05 (171.24) a kg at Bangkok.
Spot rates (Rs/kg) were: RSS-4: 168 (168); RSS-5:165 (165); ungraded:163 (163); ISNR 20:151.50 (151.50) and Latex 60 per cent :110.50 (110.50)
Rubber Tumbles to Two-Week Low on Europe Debt Crisis, Oil Dip
Posted: 06 Jun 2010 10:30 PM PDT
By Supunnabul Suwannakij
June 7 (Bloomberg) -- Rubber tumbled to the lowest level in two weeks on concern the European debt crisis may slow the global economic recovery, weakening demand for the commodity used to make tires.
Futures in Tokyo plunged as much as 6.5 percent to 256 yen a kilogram ($2,809 a metric ton), the lowest level since May 21. The price fell 3.8 percent last week, the biggest drop since the week ended May 7, on increased output from Thailand and concern that Chinese demand may decline.
Crude oil dropped for a second day amid investor’s fear Europe’s debt crisis will widen and after the U.S. added fewer jobs than forecast last month, suggesting energy demand may be slow to recover. The euro fell to its weakest level since November 2001 versus the yen.
“The main factor for the sharp fall today is because of stronger yen, triggered by the euro collapse,” said Kazunori Kokubo, general manager for International Business Department of commodity broker Yutaka Shoji Ltd. “Other commodities, especially oil, also came down so sharply. That reflects concerns over impact of the Europe’s debt problems.”
Rubber for November delivery, the most-active contract, declined 16 yen, or 5.8 percent, to 257.9 yen per kilogram on the Tokyo Commodity Exchange as of 11:36 a.m. in Tokyo.
September-delivery rubber on the Shanghai Futures Exchange declined the 5 percent daily limit to 20,560 yuan ($3,011) a ton, the lowest level since Nov. 13, 2009.
China’s sales of cars, sport-utility vehicles and multipurpose vehicles rose 25 percent in May from a year earlier, compared with growth of 34 percent in April, the China Automotive Technology & Research Center said June 1.
Thai Supplies
“Oil’s decline spilled over to the rubber market,” Chaiwat Muenmee, an analyst at broker DS Futures Co., said by phone from Bangkok. Rubber often tracks oil prices as the rival synthetic product is made from petroleum.
Crude oil for July delivery lost 2.4 percent to $69.83 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 4.2 percent on June 4 after the Labor Department said that payrolls rose by 431,000 in May. Economists projected a 536,000 gain, according to the median forecast in a Bloomberg News survey.
Cash prices of natural rubber in Thailand, the top exporter, may decline as production increases this month, the Thai Rubber Association said last week.
Production may exceed 200,000 tons a month in June and July, as much as 30 percent more than the low-output period in April and May, the group’s President Luckchai Kittipol said June 2. Output this year may be 3.2 million tons, matching 2009, he said.
The free-on-board price of Thai RSS-3 grade rubber for July delivery, which excludes freight and insurance, dropped 1.6 percent June 4 to 119.65 baht ($3.66) a kilogram, the Rubber Institute of Thailand said on its website. The prices will be updated at about noon local time.
(bloomberg.com)
U.S. Auto Sales Up but China Slowed Down
Posted: 06 Jun 2010 10:27 PM PDT
7 June 2010 - U.S. auto sales in May rose for the seventh consecutive month as most car makers recorded robust gains on the back of rising consumer confidence.
Growing purchases by business owners, renewed popularity for some large trucks and sport utility vehicles, recent decline in the price of gasoline and higher purchases by rental car companies contributed to the strength of the U.S. auto sales in May.
General Motors Co. reported a 17% year-over-year rise in monthly sales to 223,410 cars and light trucks. Ford Motor Co. posted a 22% rise to 162,813, whilst Chrysler Group LLC a 33% rise to 104,819.
For the makers of Japanese cars in the U.S, Toyota Motor Corp. reported a 6.7% rise for May to 162,813 vehicles. Honda Motor Co. posted May sales of 105,407, an increase of 18.6% from May 2009 while Nissan Motor Corp. said its sales in May increased by 24% to 83,764 units.
Korea’s Hyundai Motor Co. matched Chrysler’s growth rate, as its sales also increased 33% to 49,045 vehicles.
Despite the gains recorded during the last seven months, vehicle makers were cautious about its sustainability citing recent declines in the stock market and the Euro-zone debt crisis as potential threats.
In China, however, auto sales slowed down last month as falling stock prices and rising consumer prices eroded wealth in the world’s largest automobile market.
China auto sales for May rose 25% to 885,800 units for cars, sport-utility vehicles and multipurpose vehicles, compared with 34% in April.
(Irco.biz)
Strong commodity prices dampened by European debt crisis
Posted: 06 Jun 2010 07:42 PM PDT
On the global front, cocoa prices on both London and New York markets are experiencing new rallies due to shrinking stockpiles and tight supplies for chocolate ingredients despite higher demand.
Cocoa stockpiles in the warehouses monitored by US ICE Futures are at the lowest since March 24.
Last Friday, cocoa on ICE Futures for July delivery touched a high of US$3,065 per tonne – the highest recorded since May 11 – before closing at US$3,048 per tonne.
Similarly, the commodity advanced to £2,567 a tonne on the Liffe exchange in London, the highest price since at least 21 years ago.
CPO
After touching a high of RM2,700 per tonne in May, CPO has gradually come down to trade below RM2,500 per tonne currently.
CPO, which takes its cue from the lower crude oil and soybean prices, also had to succumb to higher stock build-up and lower offtake from major overseas buyers.
In the coming months, market players feared that local palm oil stocks would increase further, particularly in September and October, being seasonally high production periods for the year.
Malaysian Estate Owners Association president Boon Weng Siew said CPO was not likely to touch RM3,000 per tonne this year, on expectation of further increase in palm oil stocks for the rest of 2010.
“Should crude oil prices fall below US$70 per barrel, CPO prices are expected to come down further,” he added. Palm oil biodiesel is a substitute for fossil fuel.
To ensure stability in CPO prices, Boon said that Malaysia needed to speed up the implementation of its mandatory biodiesel programme. “We must quickly take some of the high palm oil stocks for biodiesel production,” he said.
Tin
Tin prices on the Kuala Lumpur Tin Market so far this year have fared better than in 2009. On average, the commodity has been trading at the US$17,000 per tonne level. It touched a high of US$18,666 per tonne in April before coming down to US$17,500 per tonne last Friday.
A tin analyst said tin prices would stay strong at current levels but “will not reach the all-time high at US$24,040 per tonne recorded in 2008.”
There is still fear over supply tightness. This is view of the ongoing move by Indonesia, the world’s largest tin exporter, to clamp down on illegal mining and depletion of onshore mines at its Bangka-Belitung islands off Sumatra after centuries of unregulated mining, the analyst said.
On the local front, the latest interesting development is the Perak government’s intention to revive tin mining operations in the state and potential review of its mining policy.
(biz.thestar.com.my)
Growers oppose natural rubber import duty cuts
Posted: 06 Jun 2010 07:38 PM PDT
By Lakshmi Krishnakumar
New Delhi, June 6 (IANS) Young farmers in northeast India are a concerned lot after the Delhi High Court asked the government to “consider carefully” the user industry’s demand to bring down import duty on natural rubber - a move that they feel can disturb peace.
“Bringing down the import duty will adversely affect us farmers. We are small growers and not capitalists. We depend on larger inputs from a small area of cultivation,” said John Millik, 26, a farmer from Karbi Anglong district of Assam.
The May 17 high court order came on a petition filed by the Indian Cycle and Rickshaw Tyre Manufacturers Association, the Automotive Tyre Manufacturers Association and the All India Rubber Industries Association.
They urged the court to ask the government to regulate natural rubber prices by removing duties, fixing a price band and banning futures trade in the commodity. They also want the import duty on natural rubber to be brought down from 20 percent to 7 percent.
Millik feels that along with economic growth and development, rubber has helped curb separatism and insurgency to an extent in the region.
“Most youths are unemployed, illiterate and poor, and are easily persuaded to hold arms. But with cultivation that is sustaining and rewarding like rubber, extremism has come down to a certain level.
“Prospects of rubber plantation motivated us to take up this cultivation and I think the trend will grow, if the prices do not fall,” he said.
However, ATMA is pressing ahead with its demand, arguing that the import duty on finished product should be higher than the raw material itself.
An ATMA official said: “Usually the import duty on finished product is higher than the raw material but here the import duty on natural rubber (raw material) is 20 percent while on tyre (finished product) is only 10 percent.
“If that is not possible, then we demand the import duty on tyre to be increased,” he added.
The rubber growers have slammed the user industry’s demands.
The Indian Rubber Growers Association (IRGA) general secretary and vice chairman of the Rubber Board, Siby Monipally, told IANS that this was an attempt by the user-industry to regain supremacy in the rubber market to dictate prices to its advantage.
“They don’t want market forces to play its role. This is with an ulterior motive to damage rubber industry and interests of farmers in India,” Monipally said.
“Take the example of Kerala. Rubber is a Rs.10,000 crore industry there. Kerala was not affected by the global meltdown due to rubber cultivation. We have also recorded inclusive growth in the northeast,” he said.
The secretary and founder of the Mendhpather Multipurpose Cooperative Society in Meghalaya, sister Rose Kayathinkara, said: “I initiated rubber cultivation in Garo Hills. The development we have witnessed has been steady and progressive. The import duty in no way should be brought down.
“The youth here has suffered a lot from poverty and unemployment and they end up being part of extremist groups but rubber cultivation has helped them think different and has generated employment and income to many,” she added.
There are an estimated 1.4 million farmers in India and almost seven million households that benefit from the cultivation indirectly generating employment opportunities.
“Rubber plantation has a gestation period of at least seven years. So for the growth level to be sustained, the market prices have to be favourable to small growers,” Monipally said.
Members of IRGA and the rubber board will meet Prime Minister Manmohan Singh and Commerce Minister Anand Sharma with requests to maintain import duty at 20 percent and not ban futures trading on natural rubber.
(thaindian.com)
Monday, June 7, 2010
Rubber Futures in Tokyo Plunge 6.5% To 2 Week-Low On Crude Drop
Rubber Futures in Tokyo Plunge 6.5% To 2 Week-Low On Crude Drop
June 7 (Bloomberg) -- Rubber futures in Tokyo plunged as much as 6.5 percent to the lowest level in more than two weeeks after crude oil slumped. The November-delivery contract dropped to 256 yen a kilogram, before trading at 258 yen at 10:09 a.m.
June 7 (Bloomberg) -- Rubber futures in Tokyo plunged as much as 6.5 percent to the lowest level in more than two weeeks after crude oil slumped. The November-delivery contract dropped to 256 yen a kilogram, before trading at 258 yen at 10:09 a.m.
Friday, June 4, 2010
Rubber growers oppose cut in import duty, ban on futures
Rubber growers oppose cut in import duty, ban on futures
Association submits memorandum to Commerce Ministry.
Kottayam, June 3
There was no rationale in the demand of the consuming industry to reduce import duty and ban futures trading in natural rubber, according to a memorandum submitted by the Indian Rubber Growers Association (IRGA) to the Minister of Commerce and Industries.
Export of tyres from India had shown a growth of 30 per cent this year.
Annual results of all tyre companies showed a growth of 25 per cent in their profits.
Rubber has a decisive role in Kerala's economy.
Rubber cultivation has picked up to a great extent in North Eastern States particularly Tripura, Assam and Meghalaya where it has transformed the lives of the people and terrorists have laid down their arms to start cultivation.
By the introduction of futures market an efficient, transparent parallel mechanism is in place to the advantage of all stakeholders. Market price and futures price invariably converge on the delivery date.
Natural rubber price in India is in conformity with the international price.
The Indian Rubber Growers Association, in its memorandum to the government, has appealed to the Government to maintain import of duty of natural rubber at 20 per cent, increase import duty of used tyres at 20 per cent increase the import duty of cycle tyres, create a welfare fund for rubber tappers and refrain from banning futures trading in natural rubber.
RUBBER-Tokyo futures end mixed but still supported
Posted: 04 Jun 2010 06:11 AM PDT
BANGKOK, June 4 - Tokyo rubber futures were mixed on Friday as the benchmark distant contract inched up on speculative buying, while nearby contracts fell on stop-loss selling, dealers said.
* The benchmark rubber contract on the Tokyo Commodity Exchange <0#JRU:> for November delivery edged up 0.4 yen to settle at 273.9 yen ($2.96) per kg. It rebounded from an intra-day low of 265.7 yen on speculative buying, supported by a prospect of strong demand on the fundamental side.
* "Technically, players bought back the benchmark sixth month contract after prices found a strong support level of 265 yen. Prices were still supported by strong demand," a Japanese dealer said.
* Other nearby contracts fell between 0.6 yen to 6.8 yen as players continued to sell contracts to stop loss because oil prices remained weak, dealers said.
* Oil slipped on Friday from its highest closing price in three weeks as investors remained sceptical that rising U.S. demand and falling stockpiles would prevail over concern Europe's debt crisis may deepen.
* Dealers said TOCOM prices were expected to rise further next week as technical sentiment improved after prices finished above a psychological support level of 265 yen, but the rises could be capped by profit-taking. ($1=92.53 Yen)
(news.alibaba.com)
Rubber Board announces grants for planters
Posted: 04 Jun 2010 06:09 AM PDT
KOTTAYAM (Commodity Online): India’s central body for rubber planters, the Rubber Board of India has invited applications from rubber growers for assistance for replanting and new planting under the Rubber Plantation Development Scheme.
In a notice issued on Thursday, June 3, 2010 the board had mentioned that applications in the prescribed form in duplicate together with two copies of correct survey plan of the land already planted/ proposed to be planted in the year 2010 should reach the respective Regional Offices of the Board on or before 31.12.2010. Application forms and other details are available from all Regional Offices and Field Offices of the Board at a cost of Rs.5/- per set.
The application forms in Malayalam and English can be downloaded from the Rubber Board’s website www.rubberboard.org.in also. While using downloaded application forms, an amount of Rs.5/- will have to be remitted at the Regional Offices along with the application. Growers, who send the filled up application in the downloaded form by post, should enclose a postal order for Rs.5/- also along with the application.
In the traditional rubber growing area, ie Kerala and Kanyakumari District of Tamil Nadu, growers, whose total area under rubber does not exceed five hectares including the new planting / replanting during the current year, are eligible for planting grant for an area up to two hectares. The rate of assistance is Rs.19,500/- per hectare for replanting and new planting.
In non traditional rubber growing area (all places except Kerala and Kanyakumari District of Tamil Nadu), growers whose rubber area does not exceed 20 ha are eligible for assistance under the scheme. The rate of assistance in non-traditional area is Rs.30,000/- per hectare which includes planting subsidy, cost of polybag plants and transportation subsidy.
Applications received after 31.12.2010 will not be considered under any circumstances, the board notice stated. Therefore those who are desirous of availing themselves of the subsidy should submit their applications within the stipulated time.
(commodityonline.com)
India’s natural rubber output posts 2% rise in May
Posted: 04 Jun 2010 06:07 AM PDT
MUMBAI (Commodity Online): Natural rubber production in India increased by 2 per cent to 54,600 tonnes in May, compared to 53,550 tonnes in the same month last year, the Rubber Board said on Thursday. The rise in natural rubber (RSS-4 variety) production was attributed to increased tapping.
The Association of Natural Rubber Producing Countries, which accounts for 94 per cent of global rubber production, said the output growth which was a meager 0.2 per cent in 2007, virtually stagnated in the following year before posting a decline of 3.6 per cent in 2009.
India’s rubber growers have asked the Commerce Ministry not to reduce the import duty on natural rubber, as demanded by tyre makers, saying that it would hurt farmers in the long run. IRGA has urged the Central government to enhance the import duty on used tyres to 20 per cent, at par with the import duty on natural rubber (NR). Currently the duty is 10 per cent.
French tyre major Michelin plan to hire about 200 people in India this year as it gears up to start production from its Chennai plant in the next two years. The company is investing Rs 40 billion over a period of seven years on setting up the plant in Tamil Nadu that will produce truck and bus radial tyres.
Malaysia plans to double its natural rubber production to 1.8 million tonnes in 2020, the Malaysian Minister of Plantation Industries and Commodities. Malaysia produced 846,900 tonnes of natural rubber in 2009 and expected production in 2010 to increase by 5.9% to 900,000 tonnes.
Thailand plan to boost its domestic consumption of natural rubber by 46% from the current 397,000 tonnes per year to 580,000 tonnes per year by 2013, the Director General of the Department of Agriculture said. After three years of stagnation and decline, global rubber production is poised to grow by six per cent this year.
(commodityonline.com)
Rubber Gains, Paring Weekly Loss, as U.S. May Have Added Jobs
Posted: 04 Jun 2010 06:01 AM PDT
By Aya Takada
June 4 (Bloomberg) -- Rubber advanced for a second day, paring a weekly decline, on speculation data will show today that U.S. employers added jobs in May for a fifth consecutive month, adding to evidence for an economic recovery.
Futures increased as much as 0.3 percent, erasing earlier losses. The price fell 3.8 percent this week, the biggest drop since the week ended May 7, on increased output from Thailand and concern that Chinese demand may weaken.
The U.S. economy added 536,000 jobs in May, the most in a month since 1983, the Labor Department will say today in its nonfarm payrolls report, according to a Bloomberg News survey of economists. Expectations for an improvement in U.S. employment boosted the dollar against the Japanese currency, raising the appeal of yen-based contracts, said Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo.
“The jobs report will probably strengthen the view that the U.S. economy is recovering,” supporting the dollar against the yen, Sugata said by phone today.
Rubber for November delivery, the most-active contract, added 0.2 percent to settle at 273.9 yen per kilogram ($2,954 a metric ton) on the Tokyo Commodity Exchange.
Earlier, the price dropped to 265.7 yen, the lowest level since May 24. Thai farmers have increased tapping after the low- production season ended, expanding global supply, Sugata said.
Cash prices of natural rubber in Thailand, the top exporter, may decline as production increases this month, the Thai Rubber Association said.
Output Rebound
Production may exceed 200,000 tons a month in June and July, as much as 30 percent more than the low-output period in April and May, the group’s President Luckchai Kittipol said this week. Output this year may be 3.2 million tons, matching 2009, he said.
Rubber futures were also capped by concern that demand in China, the largest consumer, will decline, Sugata said. China’s passenger-car sales growth slowed last month as falling stock prices eroded wealth.
China’s sales of cars, sport-utility vehicles and multipurpose vehicles rose 25 percent in May from a year earlier, compared with growth of 34 percent in April, the China Automotive Technology & Research Center said June 1.
September-delivery rubber on the Shanghai Futures Exchange lost 1.3 percent to 21,645 yuan ($3,170) a ton.
(bloomberg.com)
Rubber Set for First Drop in Three Weeks as Thai Output Gains
Posted: 04 Jun 2010 05:58 AM PDT
By Aya Takada
June 4 (Bloomberg) -- Rubber declined, set for the first weekly loss in three, on increased output from Thailand and concern that demand from China may weaken.
Futures in Tokyo dropped as much as 2.9 percent to the lowest level since May 24. The price has lost 5.6 percent this week, the worst performance since the week ended May 7.
Thai farmers have increased tapping of rubber trees after the low-production season ended, expanding global supply, said Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo. China’s passenger-car sales growth slowed last month as falling stock prices eroded wealth.
“Investors were reluctant to buy rubber futures because of a seasonal increase in Thai supply and concern about Chinese demand,” Sugata said by phone today.
Rubber for November delivery, the most-active contract, fell as much as 7.8 yen to 265.7 yen per kilogram ($2,868 a metric ton) before trading at 268.7 yen on the Tokyo Commodity Exchange at 11:16 a.m. local time.
Cash prices of natural rubber in Thailand, the world’s largest exporter of the commodity, may decline as production increases this month, the Thai Rubber Association said.
Output may exceed 200,000 tons a month in June and July, as much as 30 percent more than the low-output period in April and May, the group’s President Luckchai Kittipol said this week. Output this year may be 3.2 million tons, matching 2009, he said.
Thai Prices
The free-on-board price of Thai RSS-3 grade rubber for July delivery, which excludes freight and insurance, fell 1 percent to 112.65 baht ($3.46) a kilogram yesterday, according to the Rubber Institute of Thailand.
China’s sales of cars, sport-utility vehicles and multipurpose vehicles rose 25 percent in May from a year earlier, compared with growth of 34 percent in April, the China Automotive Technology & Research Center said June 1.
A “diminishing wealth effect” from Chinese stock declines, along with high gasoline prices, may contribute to a slowdown in auto sales, Credit Suisse Group AG analysts Adrian Chan and Hung Bin Toh wrote in a report last week.
September-delivery rubber on the Shanghai Futures Exchange lost 1.8 percent to 21,550 yuan ($3,156) a ton at 10:15 a.m. local time.
(bloomberg.com)
Thailand to Boost Domestic NR Consumption
Posted: 04 Jun 2010 05:55 AM PDT
By Anant Thawatchaipracha
Thailand plan to boost its domestic consumption of natural rubber by 46% from the current 397,000 tonnes per year to 580,000 tonnes per year by 2013, Mr. Somchai Charnnarongkul, the Director General of the Department of Agriculture said last week.
The annual export value of rubber products is then expected to rise to Baht 230 billion in that year from the current level of Baht 150 billion.
This is one of the eight strategies under the 2009-2013 master plan for the rubber industry of Thailand, approved by the Cabinet on 4 May, where the Ministry of Agriculture was tasked to promote research on natural rubber, improve output, increase the level of value added and stabilize prices
Under this strategy, the plan in the short term is to reduce the export of natural rubber and increase the raw material consumption domestically, to increase the level of value added. New markets for rubber products will also be sought.
The plan also targeted to increase the average plantation yield by about 10% in 2013, from the current level of 1,737 kilogrammes per hectare per year to 1,912 kilogrammes per hectare per year. This would allow the farmers to earn at least Baht 94,000 per hectare per year.
(Irco.biz)
Japan April NR Imports Up 33%
Posted: 04 Jun 2010 05:52 AM PDT
Japan imported 69,256 tonnes of natural rubber in April, up 6.7% from March and 33.0% from a year earlier, according to data released by the Rubber Trade Association of Japan.
Whilst no reason was provided for these changes, the Association referred to data from the Japan Automobile Dealers Association that domestic sales of new cars, trucks and buses had been rising for the last 10 consecutive months, by 28% compared to a year earlier in May.
The Association also released data on Japan’s NR stocks which was down 11% from 4,963 tonnes on May 10 to 4,416 tonnes on May 20, while natural latex stocks was up to 162 tonnes from 112 tonnes and synthetic rubber stocks from 1,525 tonnes to1,607 tonnes.
Japan’s rubber stocks have been steadily declining. The highest level this year was recorded on 28 February at 8,222 tonnes whilst the record low of 3,902 tonnes was touched on 10 November 2009.
(Irco.biz)
Association submits memorandum to Commerce Ministry.
Kottayam, June 3
There was no rationale in the demand of the consuming industry to reduce import duty and ban futures trading in natural rubber, according to a memorandum submitted by the Indian Rubber Growers Association (IRGA) to the Minister of Commerce and Industries.
Export of tyres from India had shown a growth of 30 per cent this year.
Annual results of all tyre companies showed a growth of 25 per cent in their profits.
Rubber has a decisive role in Kerala's economy.
Rubber cultivation has picked up to a great extent in North Eastern States particularly Tripura, Assam and Meghalaya where it has transformed the lives of the people and terrorists have laid down their arms to start cultivation.
By the introduction of futures market an efficient, transparent parallel mechanism is in place to the advantage of all stakeholders. Market price and futures price invariably converge on the delivery date.
Natural rubber price in India is in conformity with the international price.
The Indian Rubber Growers Association, in its memorandum to the government, has appealed to the Government to maintain import of duty of natural rubber at 20 per cent, increase import duty of used tyres at 20 per cent increase the import duty of cycle tyres, create a welfare fund for rubber tappers and refrain from banning futures trading in natural rubber.
RUBBER-Tokyo futures end mixed but still supported
Posted: 04 Jun 2010 06:11 AM PDT
BANGKOK, June 4 - Tokyo rubber futures were mixed on Friday as the benchmark distant contract inched up on speculative buying, while nearby contracts fell on stop-loss selling, dealers said.
* The benchmark rubber contract on the Tokyo Commodity Exchange <0#JRU:> for November delivery edged up 0.4 yen to settle at 273.9 yen ($2.96) per kg. It rebounded from an intra-day low of 265.7 yen on speculative buying, supported by a prospect of strong demand on the fundamental side.
* "Technically, players bought back the benchmark sixth month contract after prices found a strong support level of 265 yen. Prices were still supported by strong demand," a Japanese dealer said.
* Other nearby contracts fell between 0.6 yen to 6.8 yen as players continued to sell contracts to stop loss because oil prices remained weak, dealers said.
* Oil slipped on Friday from its highest closing price in three weeks as investors remained sceptical that rising U.S. demand and falling stockpiles would prevail over concern Europe's debt crisis may deepen.
* Dealers said TOCOM prices were expected to rise further next week as technical sentiment improved after prices finished above a psychological support level of 265 yen, but the rises could be capped by profit-taking. ($1=92.53 Yen)
(news.alibaba.com)
Rubber Board announces grants for planters
Posted: 04 Jun 2010 06:09 AM PDT
KOTTAYAM (Commodity Online): India’s central body for rubber planters, the Rubber Board of India has invited applications from rubber growers for assistance for replanting and new planting under the Rubber Plantation Development Scheme.
In a notice issued on Thursday, June 3, 2010 the board had mentioned that applications in the prescribed form in duplicate together with two copies of correct survey plan of the land already planted/ proposed to be planted in the year 2010 should reach the respective Regional Offices of the Board on or before 31.12.2010. Application forms and other details are available from all Regional Offices and Field Offices of the Board at a cost of Rs.5/- per set.
The application forms in Malayalam and English can be downloaded from the Rubber Board’s website www.rubberboard.org.in also. While using downloaded application forms, an amount of Rs.5/- will have to be remitted at the Regional Offices along with the application. Growers, who send the filled up application in the downloaded form by post, should enclose a postal order for Rs.5/- also along with the application.
In the traditional rubber growing area, ie Kerala and Kanyakumari District of Tamil Nadu, growers, whose total area under rubber does not exceed five hectares including the new planting / replanting during the current year, are eligible for planting grant for an area up to two hectares. The rate of assistance is Rs.19,500/- per hectare for replanting and new planting.
In non traditional rubber growing area (all places except Kerala and Kanyakumari District of Tamil Nadu), growers whose rubber area does not exceed 20 ha are eligible for assistance under the scheme. The rate of assistance in non-traditional area is Rs.30,000/- per hectare which includes planting subsidy, cost of polybag plants and transportation subsidy.
Applications received after 31.12.2010 will not be considered under any circumstances, the board notice stated. Therefore those who are desirous of availing themselves of the subsidy should submit their applications within the stipulated time.
(commodityonline.com)
India’s natural rubber output posts 2% rise in May
Posted: 04 Jun 2010 06:07 AM PDT
MUMBAI (Commodity Online): Natural rubber production in India increased by 2 per cent to 54,600 tonnes in May, compared to 53,550 tonnes in the same month last year, the Rubber Board said on Thursday. The rise in natural rubber (RSS-4 variety) production was attributed to increased tapping.
The Association of Natural Rubber Producing Countries, which accounts for 94 per cent of global rubber production, said the output growth which was a meager 0.2 per cent in 2007, virtually stagnated in the following year before posting a decline of 3.6 per cent in 2009.
India’s rubber growers have asked the Commerce Ministry not to reduce the import duty on natural rubber, as demanded by tyre makers, saying that it would hurt farmers in the long run. IRGA has urged the Central government to enhance the import duty on used tyres to 20 per cent, at par with the import duty on natural rubber (NR). Currently the duty is 10 per cent.
French tyre major Michelin plan to hire about 200 people in India this year as it gears up to start production from its Chennai plant in the next two years. The company is investing Rs 40 billion over a period of seven years on setting up the plant in Tamil Nadu that will produce truck and bus radial tyres.
Malaysia plans to double its natural rubber production to 1.8 million tonnes in 2020, the Malaysian Minister of Plantation Industries and Commodities. Malaysia produced 846,900 tonnes of natural rubber in 2009 and expected production in 2010 to increase by 5.9% to 900,000 tonnes.
Thailand plan to boost its domestic consumption of natural rubber by 46% from the current 397,000 tonnes per year to 580,000 tonnes per year by 2013, the Director General of the Department of Agriculture said. After three years of stagnation and decline, global rubber production is poised to grow by six per cent this year.
(commodityonline.com)
Rubber Gains, Paring Weekly Loss, as U.S. May Have Added Jobs
Posted: 04 Jun 2010 06:01 AM PDT
By Aya Takada
June 4 (Bloomberg) -- Rubber advanced for a second day, paring a weekly decline, on speculation data will show today that U.S. employers added jobs in May for a fifth consecutive month, adding to evidence for an economic recovery.
Futures increased as much as 0.3 percent, erasing earlier losses. The price fell 3.8 percent this week, the biggest drop since the week ended May 7, on increased output from Thailand and concern that Chinese demand may weaken.
The U.S. economy added 536,000 jobs in May, the most in a month since 1983, the Labor Department will say today in its nonfarm payrolls report, according to a Bloomberg News survey of economists. Expectations for an improvement in U.S. employment boosted the dollar against the Japanese currency, raising the appeal of yen-based contracts, said Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo.
“The jobs report will probably strengthen the view that the U.S. economy is recovering,” supporting the dollar against the yen, Sugata said by phone today.
Rubber for November delivery, the most-active contract, added 0.2 percent to settle at 273.9 yen per kilogram ($2,954 a metric ton) on the Tokyo Commodity Exchange.
Earlier, the price dropped to 265.7 yen, the lowest level since May 24. Thai farmers have increased tapping after the low- production season ended, expanding global supply, Sugata said.
Cash prices of natural rubber in Thailand, the top exporter, may decline as production increases this month, the Thai Rubber Association said.
Output Rebound
Production may exceed 200,000 tons a month in June and July, as much as 30 percent more than the low-output period in April and May, the group’s President Luckchai Kittipol said this week. Output this year may be 3.2 million tons, matching 2009, he said.
Rubber futures were also capped by concern that demand in China, the largest consumer, will decline, Sugata said. China’s passenger-car sales growth slowed last month as falling stock prices eroded wealth.
China’s sales of cars, sport-utility vehicles and multipurpose vehicles rose 25 percent in May from a year earlier, compared with growth of 34 percent in April, the China Automotive Technology & Research Center said June 1.
September-delivery rubber on the Shanghai Futures Exchange lost 1.3 percent to 21,645 yuan ($3,170) a ton.
(bloomberg.com)
Rubber Set for First Drop in Three Weeks as Thai Output Gains
Posted: 04 Jun 2010 05:58 AM PDT
By Aya Takada
June 4 (Bloomberg) -- Rubber declined, set for the first weekly loss in three, on increased output from Thailand and concern that demand from China may weaken.
Futures in Tokyo dropped as much as 2.9 percent to the lowest level since May 24. The price has lost 5.6 percent this week, the worst performance since the week ended May 7.
Thai farmers have increased tapping of rubber trees after the low-production season ended, expanding global supply, said Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo. China’s passenger-car sales growth slowed last month as falling stock prices eroded wealth.
“Investors were reluctant to buy rubber futures because of a seasonal increase in Thai supply and concern about Chinese demand,” Sugata said by phone today.
Rubber for November delivery, the most-active contract, fell as much as 7.8 yen to 265.7 yen per kilogram ($2,868 a metric ton) before trading at 268.7 yen on the Tokyo Commodity Exchange at 11:16 a.m. local time.
Cash prices of natural rubber in Thailand, the world’s largest exporter of the commodity, may decline as production increases this month, the Thai Rubber Association said.
Output may exceed 200,000 tons a month in June and July, as much as 30 percent more than the low-output period in April and May, the group’s President Luckchai Kittipol said this week. Output this year may be 3.2 million tons, matching 2009, he said.
Thai Prices
The free-on-board price of Thai RSS-3 grade rubber for July delivery, which excludes freight and insurance, fell 1 percent to 112.65 baht ($3.46) a kilogram yesterday, according to the Rubber Institute of Thailand.
China’s sales of cars, sport-utility vehicles and multipurpose vehicles rose 25 percent in May from a year earlier, compared with growth of 34 percent in April, the China Automotive Technology & Research Center said June 1.
A “diminishing wealth effect” from Chinese stock declines, along with high gasoline prices, may contribute to a slowdown in auto sales, Credit Suisse Group AG analysts Adrian Chan and Hung Bin Toh wrote in a report last week.
September-delivery rubber on the Shanghai Futures Exchange lost 1.8 percent to 21,550 yuan ($3,156) a ton at 10:15 a.m. local time.
(bloomberg.com)
Thailand to Boost Domestic NR Consumption
Posted: 04 Jun 2010 05:55 AM PDT
By Anant Thawatchaipracha
Thailand plan to boost its domestic consumption of natural rubber by 46% from the current 397,000 tonnes per year to 580,000 tonnes per year by 2013, Mr. Somchai Charnnarongkul, the Director General of the Department of Agriculture said last week.
The annual export value of rubber products is then expected to rise to Baht 230 billion in that year from the current level of Baht 150 billion.
This is one of the eight strategies under the 2009-2013 master plan for the rubber industry of Thailand, approved by the Cabinet on 4 May, where the Ministry of Agriculture was tasked to promote research on natural rubber, improve output, increase the level of value added and stabilize prices
Under this strategy, the plan in the short term is to reduce the export of natural rubber and increase the raw material consumption domestically, to increase the level of value added. New markets for rubber products will also be sought.
The plan also targeted to increase the average plantation yield by about 10% in 2013, from the current level of 1,737 kilogrammes per hectare per year to 1,912 kilogrammes per hectare per year. This would allow the farmers to earn at least Baht 94,000 per hectare per year.
(Irco.biz)
Japan April NR Imports Up 33%
Posted: 04 Jun 2010 05:52 AM PDT
Japan imported 69,256 tonnes of natural rubber in April, up 6.7% from March and 33.0% from a year earlier, according to data released by the Rubber Trade Association of Japan.
Whilst no reason was provided for these changes, the Association referred to data from the Japan Automobile Dealers Association that domestic sales of new cars, trucks and buses had been rising for the last 10 consecutive months, by 28% compared to a year earlier in May.
The Association also released data on Japan’s NR stocks which was down 11% from 4,963 tonnes on May 10 to 4,416 tonnes on May 20, while natural latex stocks was up to 162 tonnes from 112 tonnes and synthetic rubber stocks from 1,525 tonnes to1,607 tonnes.
Japan’s rubber stocks have been steadily declining. The highest level this year was recorded on 28 February at 8,222 tonnes whilst the record low of 3,902 tonnes was touched on 10 November 2009.
(Irco.biz)
‘Rain-guarding' lifts rubber output in May2010
‘Rain-guarding' lifts rubber output in May
Our Bureau
Kochi, June 3
The advent of good summer showers, early in the season, have resulted in increased rubber production in May.
In addition, high global and domestic prices have ensured that farmers maximised the yield from their plantations.
The high returns of the past several months have also resulted in more farmers ‘rain guarding' their trees, which has enabled them to tap the trees even during the rains – thereby increasing production, sources in the Rubber Board said.
Yield
Though the yield has declined across several individual holdings, this was neutralised by early resumption in tapping and increase in average tapped area on a month-on-month basis.
Production during the first two months of the current fiscal (April-May), was up three per cent at 1,08,100 tonnes.
While production in May increased less than two per cent, increased economic activity and demand from tyre and non-tyre sectors, led to consumption growing by close to 11 per cent.
Despite skyrocketing prices, there was all-round growth in demand and buying of natural rubber from both the tyre and non-tyre sectors, sources said. Most of the increased demand was met with available stocks .
Imports
The month also saw a sharp deceleration in imports, which fell by as much as 42 per cent. This was mainly because the international price of rubber sheets ruled higher than domestic prices for the better part of the month.
The Rubber Board has projected rubber imports to touch 70,000 tonnes this year. Rubber exports also firmed up during the month, as demand from China, for latex, buoyed up global prices and exporters exploited the price differentials between the domestic and international markets.
The Rubber Board has set a production target of 8,93,000 tonnes this year. However, consumption is slated higher, at 9,78,000 tonnes.
Available stocks
Much of the production-consumption mismatch is expected to be met from rubber stocks available within the country. However, rubber stocks which was estimated at 2,18,036 tonnes in May 2010, is expected to decline to 1,83,000 tonnes by the end of the current year.
Rising rubber prices could upset JK Tyre’s volumes-driven growth
Posted: 02 Jun 2010 06:38 PM PDT
Higher revenue on the back of increased volume and lower base helped the country’s third-largest tyre producer, JK Tyre, more than double its net profits to Rs 26 crore for the quarter ended March 2010 with a 22% increase in revenue. The company’s numbers are more or less similar to those it reported two years ago when the tyre sector was in fine shape.
The share price of JK Tyre touched Rs 235 in March, the highest level in a year, before shrinking by a third as investors have turned cautious due to the impact of relentless increase in rubber prices, which make up half of the cost for tyre producers. The change in operations has come from better volume growth that was up 11% to 56,700 metric tonne for the three months ended in March as compared to 51,000 metric tonne in the year-ago period. But operating margins have been impacted by increase in raw material costs.
Input costs as a percentage of revenues rose to 69% from about 57% in the year-ago period and the company recorded a 90 basis points (bps) decline in operating margin last quarter. To meet the rising costs, the firm has raised tyre prices by an average 5% across the segments over the past two quarters.
Price of rubber has more than doubled in the past one year and traded at Rs 169/kg as of June 1. This is expected to result in further pressure on product prices in the current quarter (April-June). But given that the increase in rubber prices and other raw materials is estimated at 30-40% and the tyre price increase is projected to be relatively modest, the company will continue to face margin pressure in coming months. The net profit, however, was partly boosted by moderation in interest and depreciation cost.
For the full year ended March 2010, the company had consolidated net profit of Rs 224 crore with topline of Rs 4,571 crore. The numbers are not comparable to the past year as the previous financial year stretched to 18 months. Mexican firm Tornel that JK Tyre acquired two years ago has increased net sales 10% for FY10.
The company is operating at full capacity in its Indian operations and expects the demand from the passenger tyre segment to grow 18% annually. The company plans to invest a total Rs 750 crore to raise capacities and has already invested Rs 315 crore last year.
Given this background, the outlook for the coming quarters looks bright as far as revenues are concerned. However, if rubber price continues to rise, margins would be under pressure in the forthcoming quarters.
(economictimes.indiatimes.com)
Rubber Prices in Thailand May Decline as Production Rebounds
Posted: 02 Jun 2010 06:34 PM PDT
By Supunnabul Suwannakij
June 2 (Bloomberg) -- Cash prices of natural rubber in Thailand, the world’s largest exporter of the commodity, may decline as production increases this month, according to the Thai Rubber Association.
Output may exceed 200,000 tons a month in June and July, up as much as 30 percent from a low-production period in April and May, the group’s President Luckchai Kittipol said. Output this year may be 3.2 million tons, matching that of 2009, he said.
Futures in Tokyo have tumbled 20 percent after reaching a 21-month high of 338.5 yen per kilogram ($3,704 a ton) on April 16 on concern Europe’s debt crisis may slow the global economic recovery. Manufacturing in China increased at a slower pace than expected last month, raising concern that demand from the largest rubber user may weaken.
“Rising output and worries over slow manufacturing growth in China will pressure the price,” said Luckchai. “Thai prices will gradually decline to a balanced level after overheating to a record this year,” he said, without providing a forecast.
Futures for November delivery, the most-active contract, declined as much as 15.7 yen to 266.5 yen per kilogram before settling at 269.2 yen on the Tokyo Commodity Exchange. Prices dropped to five-month low of 250.9 yen on May 17.
The free-on-board price of the benchmark Thai RSS-3 grade rubber for July-delivery, which excludes freight and insurance, declined 2.8 percent to 122.90 baht a kilogram today, the Rubber Institute of Thailand said. The price reached a record 130.55 baht on April 27.
High Thai prices have made supplies less competitive than those from rivals Indonesia and Malaysia, said Luckchai.
Supply Shortages
“We’re worried that demand for RSS-3 rubber may decline as prices are volatile and higher than they should have been,” he said. Domestic supply shortages are partly responsible for the high prices, he said.
Chinese buyers cancelled orders for less than 2,000 tons of RSS-3 rubber in May from Thailand, said Luckchai.
Still, “that amount is insignificant, compared with total exports to China of around 1.1 million tons a year,” he said. “It is unlikely we’ll see more product cancellation as prices have improved from the low level in May.”
Thai rubber exports this year may exceed the 2.8 million tons shipped in 2009 as the global economic recovery is expected to increase demand for tires from main buyers including China, Japan and Europe, he said.
(bloomberg.com)
Spot rubber improves on supply concerns
Our Correspondent
Kottayam, June 3
Spot rubber prices improved on Thursday. According to sources, the market regained strength mainly on supply concerns catalysed by a better closing in domestic futures on the National Multi Commodity Exchange.
Sheet rubber firmed up to Rs 168 (Rs 167) a kg while the market made all-round gains followed by fresh buying and short covering. The transactions were low. The June futures closed at Rs 168.14 (Rs 166.75), July at Rs 164.50 (Rs 163.43), August at Rs 158.32 (Rs 157.75) and September at Rs 154.25 (Rs 154.71) a kg for RSS 4 on the NMCE.
RSS 3 slipped with the June futures dropping to ¥364.7/Rs 183.56 (¥366.0) while the July futures improved to ¥354.4 (¥351.3), August to ¥327.9 (¥323.9) and September to ¥300.2 (¥296.8) a kg during the day session on the Tokyo Commodity Exchange.
RSS 3 (spot) moved down to Rs 176.46 (Rs 176.63) a kg at Bangkok.
Spot rubber rates (Rs/kg) were: RSS-4: 168 (167); RSS-5: 166 (164); ungraded: 163 (161); ISNR 20:152.50 (152) and latex 60 per cent: 111 (111).
Our Bureau
Kochi, June 3
The advent of good summer showers, early in the season, have resulted in increased rubber production in May.
In addition, high global and domestic prices have ensured that farmers maximised the yield from their plantations.
The high returns of the past several months have also resulted in more farmers ‘rain guarding' their trees, which has enabled them to tap the trees even during the rains – thereby increasing production, sources in the Rubber Board said.
Yield
Though the yield has declined across several individual holdings, this was neutralised by early resumption in tapping and increase in average tapped area on a month-on-month basis.
Production during the first two months of the current fiscal (April-May), was up three per cent at 1,08,100 tonnes.
While production in May increased less than two per cent, increased economic activity and demand from tyre and non-tyre sectors, led to consumption growing by close to 11 per cent.
Despite skyrocketing prices, there was all-round growth in demand and buying of natural rubber from both the tyre and non-tyre sectors, sources said. Most of the increased demand was met with available stocks .
Imports
The month also saw a sharp deceleration in imports, which fell by as much as 42 per cent. This was mainly because the international price of rubber sheets ruled higher than domestic prices for the better part of the month.
The Rubber Board has projected rubber imports to touch 70,000 tonnes this year. Rubber exports also firmed up during the month, as demand from China, for latex, buoyed up global prices and exporters exploited the price differentials between the domestic and international markets.
The Rubber Board has set a production target of 8,93,000 tonnes this year. However, consumption is slated higher, at 9,78,000 tonnes.
Available stocks
Much of the production-consumption mismatch is expected to be met from rubber stocks available within the country. However, rubber stocks which was estimated at 2,18,036 tonnes in May 2010, is expected to decline to 1,83,000 tonnes by the end of the current year.
Rising rubber prices could upset JK Tyre’s volumes-driven growth
Posted: 02 Jun 2010 06:38 PM PDT
Higher revenue on the back of increased volume and lower base helped the country’s third-largest tyre producer, JK Tyre, more than double its net profits to Rs 26 crore for the quarter ended March 2010 with a 22% increase in revenue. The company’s numbers are more or less similar to those it reported two years ago when the tyre sector was in fine shape.
The share price of JK Tyre touched Rs 235 in March, the highest level in a year, before shrinking by a third as investors have turned cautious due to the impact of relentless increase in rubber prices, which make up half of the cost for tyre producers. The change in operations has come from better volume growth that was up 11% to 56,700 metric tonne for the three months ended in March as compared to 51,000 metric tonne in the year-ago period. But operating margins have been impacted by increase in raw material costs.
Input costs as a percentage of revenues rose to 69% from about 57% in the year-ago period and the company recorded a 90 basis points (bps) decline in operating margin last quarter. To meet the rising costs, the firm has raised tyre prices by an average 5% across the segments over the past two quarters.
Price of rubber has more than doubled in the past one year and traded at Rs 169/kg as of June 1. This is expected to result in further pressure on product prices in the current quarter (April-June). But given that the increase in rubber prices and other raw materials is estimated at 30-40% and the tyre price increase is projected to be relatively modest, the company will continue to face margin pressure in coming months. The net profit, however, was partly boosted by moderation in interest and depreciation cost.
For the full year ended March 2010, the company had consolidated net profit of Rs 224 crore with topline of Rs 4,571 crore. The numbers are not comparable to the past year as the previous financial year stretched to 18 months. Mexican firm Tornel that JK Tyre acquired two years ago has increased net sales 10% for FY10.
The company is operating at full capacity in its Indian operations and expects the demand from the passenger tyre segment to grow 18% annually. The company plans to invest a total Rs 750 crore to raise capacities and has already invested Rs 315 crore last year.
Given this background, the outlook for the coming quarters looks bright as far as revenues are concerned. However, if rubber price continues to rise, margins would be under pressure in the forthcoming quarters.
(economictimes.indiatimes.com)
Rubber Prices in Thailand May Decline as Production Rebounds
Posted: 02 Jun 2010 06:34 PM PDT
By Supunnabul Suwannakij
June 2 (Bloomberg) -- Cash prices of natural rubber in Thailand, the world’s largest exporter of the commodity, may decline as production increases this month, according to the Thai Rubber Association.
Output may exceed 200,000 tons a month in June and July, up as much as 30 percent from a low-production period in April and May, the group’s President Luckchai Kittipol said. Output this year may be 3.2 million tons, matching that of 2009, he said.
Futures in Tokyo have tumbled 20 percent after reaching a 21-month high of 338.5 yen per kilogram ($3,704 a ton) on April 16 on concern Europe’s debt crisis may slow the global economic recovery. Manufacturing in China increased at a slower pace than expected last month, raising concern that demand from the largest rubber user may weaken.
“Rising output and worries over slow manufacturing growth in China will pressure the price,” said Luckchai. “Thai prices will gradually decline to a balanced level after overheating to a record this year,” he said, without providing a forecast.
Futures for November delivery, the most-active contract, declined as much as 15.7 yen to 266.5 yen per kilogram before settling at 269.2 yen on the Tokyo Commodity Exchange. Prices dropped to five-month low of 250.9 yen on May 17.
The free-on-board price of the benchmark Thai RSS-3 grade rubber for July-delivery, which excludes freight and insurance, declined 2.8 percent to 122.90 baht a kilogram today, the Rubber Institute of Thailand said. The price reached a record 130.55 baht on April 27.
High Thai prices have made supplies less competitive than those from rivals Indonesia and Malaysia, said Luckchai.
Supply Shortages
“We’re worried that demand for RSS-3 rubber may decline as prices are volatile and higher than they should have been,” he said. Domestic supply shortages are partly responsible for the high prices, he said.
Chinese buyers cancelled orders for less than 2,000 tons of RSS-3 rubber in May from Thailand, said Luckchai.
Still, “that amount is insignificant, compared with total exports to China of around 1.1 million tons a year,” he said. “It is unlikely we’ll see more product cancellation as prices have improved from the low level in May.”
Thai rubber exports this year may exceed the 2.8 million tons shipped in 2009 as the global economic recovery is expected to increase demand for tires from main buyers including China, Japan and Europe, he said.
(bloomberg.com)
Spot rubber improves on supply concerns
Our Correspondent
Kottayam, June 3
Spot rubber prices improved on Thursday. According to sources, the market regained strength mainly on supply concerns catalysed by a better closing in domestic futures on the National Multi Commodity Exchange.
Sheet rubber firmed up to Rs 168 (Rs 167) a kg while the market made all-round gains followed by fresh buying and short covering. The transactions were low. The June futures closed at Rs 168.14 (Rs 166.75), July at Rs 164.50 (Rs 163.43), August at Rs 158.32 (Rs 157.75) and September at Rs 154.25 (Rs 154.71) a kg for RSS 4 on the NMCE.
RSS 3 slipped with the June futures dropping to ¥364.7/Rs 183.56 (¥366.0) while the July futures improved to ¥354.4 (¥351.3), August to ¥327.9 (¥323.9) and September to ¥300.2 (¥296.8) a kg during the day session on the Tokyo Commodity Exchange.
RSS 3 (spot) moved down to Rs 176.46 (Rs 176.63) a kg at Bangkok.
Spot rubber rates (Rs/kg) were: RSS-4: 168 (167); RSS-5: 166 (164); ungraded: 163 (161); ISNR 20:152.50 (152) and latex 60 per cent: 111 (111).
Thursday, June 3, 2010
Rubber output set to record growth after 3 years
Rubber output set to record growth after 3 years
Global production pegged at 9.3 million tonnes on rising acreage.
Global rubber production is expected to perk up to 9.369 million tonnes this year on rising acreages in key producer nations.
Kochi, June 2After three tears of stagnation and decline, global rubber production is poised to grow by six per cent this year.
The Association of Natural Rubber Producing Countries (ANRPC), which accounts for 94 per cent of global rubber production, said the output growth which was a meagre 0.2 per cent in 2007, virtually stagnated in the following year before posting a decline of 3.6 per cent in 2009.
Global rubber production is expected to perk up to 9.369 million tonnes (mt) this year.
The current tightness being felt in global markets is the carry over impact of stagnant and falling production over the last three years.
Based on historical global planting trends and age structure of trees, the association had predicted that global rubber production trends are likely to remain stagnant till 2011.
Acreage rises
The prime reason why an increase can be expected this year is because the yielding area under rubber in some of the major producing countries is poised to grow.
According to the revised estimates available in mid-May, yielding area under rubber has expanded by 10,000 hectares in Cambodia, by 22,000 hectares in China, 9,000 hectares in India and 23,000 hectares in Vietnam.
In response to the surging price line farmers are also reviving tapping along un-harvested areas.
A section of the small holders in Malaysia and Indonesia is expected to have revived taping in 85,000 hectares and 64,000 hectares, respectively. Another 85,000 hectares planted in Thailand in 2003 are expected to attain maturity and begin to yield from this year onwards.
However, given the slippages in the past few years, the average annual growth rate during 2007-10 would still remain subdued at 0.8 per cent only.
Revival in production
Initial production indicators of the first few month of the current year point to a revival in production in major producing countries.
Production is expected to have increased by over 35 per cent in January-April 2010 in both Cambodia and Malaysia. Production is expected to have grown by close to 25 per cent in Thailand and Vietnam.
India's production is expected to have grown by 8.5 per cent during Jan-April period.
Consumption up
On the flip side, increased demand and consumption by countries such as China, Malaysia and India is expected to sustain the buoyancy in global rubber prices.
Consumption of natural rubber rose by 25 per cent in China, 11.7 per cent in India and 13.6 per cent in Malaysia during the first four months of current year.
The trend in the three major consuming countries in the association supports the view that demand for natural rubber remains strong despite woes and worries clouding expectation of global economic recovery.
Physical rubber weak as futures slide
Kottayam, June 2
Physical rubber prices weakened on Wednesday. The market reacted in tune with the sharp declines in Japanese futures but recovered marginally as Tokyo Commodity Exchange (TOCOM) finished slightly better on late trades. Sheet rubber which was traded even at a low of Rs 166 a kg on early trades finished at Rs 167 (169) a kg on covering purchases at closing hours. The trend continued to be mixed.
The June futures for RSS 4 closed at Rs 166.94 (165.35), July at Rs 163.70 (162.65), August at Rs 157.99 (156.78) and September at Rs 154.45 (153.47) a kg on National Multi Commodity Exchange. RSS 3 declined sharply at its June futures to ¥366 (¥379.9), July to ¥351.3 (¥364.7), August to ¥323.9 (¥340.2), September to ¥296.8 (¥310.8), October to ¥272.4 (¥285.6) and November to ¥269.2 (282.2) a kg during the day session on TOCOM. The June futures recovered partially to ¥369.5 (Rs 188.62), July to ¥355, August to ¥326.6, September to ¥298.7, October to ¥275.1 and November to ¥271 a kg on late trades.
RSS 3 (spot) nose dived to Rs 176.63 (180.85) a kg at Bangkok. Spot rubber rates in Rs/kg: RSS-4:167 (169); RSS-5:164 (167); Ungraded:161 (165); ISNR 20:152 (152) and Latex 60 per cent: 111 (111).
Continue import duty on natural rubber: growers
Staff Reporter
KOCHI: The Indian Rubber Growers' Association has appealed to Prime Minister Manmohan Singh that 20 per cent import duty on natural rubber should be continued and that the import duty on used tyres should be raised to 20 per cent.
The association, in a memorandum to the Prime Minister on Monday, requested that import duty on cycle tyres be increased, an initiative be launched to develop rubber cultivation in the North East of the country, a welfare fund be established for rubber tappers and no ban be imposed on futures trading in natural rubber.
Association general secretary and Rubber Board member Siby Monippally said in the memorandum that natural rubber played a key role in Kerala's economy and the crop contributed substantially to the State's economy.
Hard work
The memorandum said Kerala produced more than 92 per cent of the natural rubber in the country. “This has been achieved over the past 50 years by the hard work of small rubber growers of Kerala,” the memorandum said.
The small growers, owning below one hectare, contributed about 90 per cent of the total rubber production in India.
Culivatiotion
Rubber cultivation was picking up in the States of Assam, Tripura and Meghalaya. North Eastern States had the potential to bring about 4.5 lakh hectares under rubber.
The memorandum lauded the role played by the Rubber Board and said that professionalism introduced at the primary and apex level had strengthened the cooperatives to deal directly with the market worldwide.
It said the introduction of futures market had helped establish an “efficient, transparent parallel mechanism” for all stakeholders.
Export of tyres had grown and annual results of tyre companies pointed to a healthy industry, the memorandum said.(The HINDU)
Malaysia to Double NR Production by 2020
Posted: 01 Jun 2010 11:29 PM PDT
By Anant Thawatchaipracha
1 June 2010 - Malaysia plans to double its natural rubber production to 1.8 million tonnes in 2020, said Tan Sri Bernard Giluk Dompok, the Malaysian Minister of Plantation Industries and Commodities, when he launched the Strategies for the Malaysian Rubber Industry and the Malaysian Rubber Board for 2010-2020 in Kuala Lumpur on Tuesday 18 May 2020.
Malaysia produced 846,900 tonnes of natural rubber in 2009 and expected production in 2010 to increase by 5.9% to 900,000 tonnes.
To meet the production target the plan strategies to increase productivity by 1.8 tonnes per hectare per year by 2020, from the current level of about 1.4 tonnes per hectare per year and also expansion of hectarage to 1.2 million hectares with a tappable area of 1 million hectares, from the current hectarage of 1 million hectares with a tappable area of about 0.7 million hectares.
The plan also envisage increasing rubber replanting to 40,000 hectares yearly from the current 20,000 hectares, expanding existing rubber plantations and opening new rubber areas, especially in the states of Sarawak and Sabah on the island of Borneo and also converting idle lands into rubber plantations.
It also include increasing and maintaining tapping to 26 days a month and raising the number of trees per hectare to 550 from the current 350-400 trees per hectare.
The Minister also said that the Malaysian downstream rubber industry must venture into new sources of growth as the current model was too narrow based, with almost 80 % of exports consisting of latex dipped rubber goods.
Malaysia, he said, have the technological advantage and therefore the potential to become a leading hub for rubber technologies and rubber product manufacturing.
(Irco.biz)
Rubber Drops as Demand May Weaken After China Car Sales Slow
Posted: 01 Jun 2010 09:59 PM PDT
By Aya Takada
June 2 (Bloomberg) -- Rubber declined for a second day as a slowdown in China’s car sales stoked concern that demand may drop from the biggest consumer of the commodity used in tires.
Futures in Tokyo lost as much as 2.8 percent to the lowest level since May 27 also after data showed yesterday manufacturing growth in China and the euro region weakened in May, stoking speculation the economic rebound may be slowing.
China’s passenger-car sales growth slowed last month as falling stock prices eroded wealth and consumer prices rose in the world’s largest automobile market. The Shanghai Composite Index fell 9.7 percent in May as Chinese stocks remained among Asia’s worst performers this year.
“The market is weighed down by concern about the global economic recovery as data from China showed a slowdown in growth,” Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co., said today by phone. “Rubber may extend losses in tandem with other industrial materials.”
Rubber for November delivery, the most-active contract, fell as much as 7.8 yen to 274.4 yen per kilogram ($2,994 a metric ton) before trading at 277.3 yen on the Tokyo Commodity Exchange at 11:33 a.m.
China’s sales of cars, sport-utility vehicles and multipurpose vehicles rose 25 percent from a year earlier to 885,800 last month, the China Automotive Technology & Research Center said yesterday. That compares with 34 percent growth in April, according to the center. The data came out after the Tokyo exchange closed yesterday.
‘Diminishing Wealth’
A “diminishing wealth effect” from Chinese stocks, along with high gasoline prices, may contribute to a slowdown in auto sales, Credit Suisse Group AG analysts Adrian Chan and Hung Bin Toh wrote in a report last week. Vehicle sales could decline from year-earlier levels in the second half of 2010, they said.
Losses in rubber futures were limited as the yen dropped after Prime Minister Yukio Hatoyama told lawmakers he would resign, damping the allure of the currency as a haven. A weaker Japanese currency raises the appeal of yen-based contracts for the commodity traded globally in dollars.
The yen slid to 91.63 per dollar from 90.94 yesterday in New York. Ichiro Ozawa, the ruling party’s No. 2 official, will also step down, Hatoyama said today.
September-delivery rubber on the Shanghai Futures Exchange lost 1.6 percent to 22,210 yuan ($3,252) a ton.
(bloomberg.com)
Rubber Futures in Tokyo Drop 2% to 276.6 Yen/Kg
Posted: 01 Jun 2010 09:56 PM PDT
By Aya Takada
June 2 (Bloomberg) -- Rubber futures in Tokyo declined as much as 2 percent today after crude oil slumped.
The November-delivery contract dropped to 276.6 yen a kilogram at 9 a.m.
(bloomberg.com)
Raise import duty on used tyres, urges rubber association
Posted: 01 Jun 2010 09:53 PM PDT
The Indian Rubber Growers Association (IRGA) has urged the Central government to enhance the import duty on used tyres to 20 per cent, at par with the import duty on natural rubber (NR). Currently the duty is 10 per cent.
The association, in a memorandum to the Union minister for commerce, also demanded that the present import duty on NR should be maintained. Futures trading in rubber should not be banned and in order to bail out the struggling small and medium rubber-based units, import duty on cycle tyres must be raised.
Sibi J Monippally, general secretary, IRGA said export of tyres from India had shown a growth of 30 per cent this year. Annual results of all tyre companies disclose an overall growth of 25 per cent in their profits during the last financial year. He cited the example of Apollo Tyres, whose net profit increased to Rs 653 crore.
A major chunk of NR imports (152,000 tonnes) during the last financial year were made without the duty, through the advance license route.
Used tyre imports from China have increased during these years, adversely affecting domestic the tyre industry. The additional import of 45,000 tonnes of used tyre has also adversely affected rubber growers.
There is no rationale in the consuming industry’s demand to reduce import duty of NR and ban futures trading, he said.
Kerala produces 92 per cent of the total 900,000 tonnes of rubber produced in India. Moreover, 1 million people are directly involved in rubber farming and about 6 million people are indirectly associated with this business.
The association pointed out that there is no imbalance in the production and consumption of rubber in India as cited by the rubber-based industries recently.
Kerala’s economy actually revolves around rubber industry. It is the spiralling rubber price which has significantly contributed to the recent 10 per cent overall growth of Kerala’s economy, the memorandum adds.
(sify.com)
Global production pegged at 9.3 million tonnes on rising acreage.
Global rubber production is expected to perk up to 9.369 million tonnes this year on rising acreages in key producer nations.
Kochi, June 2After three tears of stagnation and decline, global rubber production is poised to grow by six per cent this year.
The Association of Natural Rubber Producing Countries (ANRPC), which accounts for 94 per cent of global rubber production, said the output growth which was a meagre 0.2 per cent in 2007, virtually stagnated in the following year before posting a decline of 3.6 per cent in 2009.
Global rubber production is expected to perk up to 9.369 million tonnes (mt) this year.
The current tightness being felt in global markets is the carry over impact of stagnant and falling production over the last three years.
Based on historical global planting trends and age structure of trees, the association had predicted that global rubber production trends are likely to remain stagnant till 2011.
Acreage rises
The prime reason why an increase can be expected this year is because the yielding area under rubber in some of the major producing countries is poised to grow.
According to the revised estimates available in mid-May, yielding area under rubber has expanded by 10,000 hectares in Cambodia, by 22,000 hectares in China, 9,000 hectares in India and 23,000 hectares in Vietnam.
In response to the surging price line farmers are also reviving tapping along un-harvested areas.
A section of the small holders in Malaysia and Indonesia is expected to have revived taping in 85,000 hectares and 64,000 hectares, respectively. Another 85,000 hectares planted in Thailand in 2003 are expected to attain maturity and begin to yield from this year onwards.
However, given the slippages in the past few years, the average annual growth rate during 2007-10 would still remain subdued at 0.8 per cent only.
Revival in production
Initial production indicators of the first few month of the current year point to a revival in production in major producing countries.
Production is expected to have increased by over 35 per cent in January-April 2010 in both Cambodia and Malaysia. Production is expected to have grown by close to 25 per cent in Thailand and Vietnam.
India's production is expected to have grown by 8.5 per cent during Jan-April period.
Consumption up
On the flip side, increased demand and consumption by countries such as China, Malaysia and India is expected to sustain the buoyancy in global rubber prices.
Consumption of natural rubber rose by 25 per cent in China, 11.7 per cent in India and 13.6 per cent in Malaysia during the first four months of current year.
The trend in the three major consuming countries in the association supports the view that demand for natural rubber remains strong despite woes and worries clouding expectation of global economic recovery.
Physical rubber weak as futures slide
Kottayam, June 2
Physical rubber prices weakened on Wednesday. The market reacted in tune with the sharp declines in Japanese futures but recovered marginally as Tokyo Commodity Exchange (TOCOM) finished slightly better on late trades. Sheet rubber which was traded even at a low of Rs 166 a kg on early trades finished at Rs 167 (169) a kg on covering purchases at closing hours. The trend continued to be mixed.
The June futures for RSS 4 closed at Rs 166.94 (165.35), July at Rs 163.70 (162.65), August at Rs 157.99 (156.78) and September at Rs 154.45 (153.47) a kg on National Multi Commodity Exchange. RSS 3 declined sharply at its June futures to ¥366 (¥379.9), July to ¥351.3 (¥364.7), August to ¥323.9 (¥340.2), September to ¥296.8 (¥310.8), October to ¥272.4 (¥285.6) and November to ¥269.2 (282.2) a kg during the day session on TOCOM. The June futures recovered partially to ¥369.5 (Rs 188.62), July to ¥355, August to ¥326.6, September to ¥298.7, October to ¥275.1 and November to ¥271 a kg on late trades.
RSS 3 (spot) nose dived to Rs 176.63 (180.85) a kg at Bangkok. Spot rubber rates in Rs/kg: RSS-4:167 (169); RSS-5:164 (167); Ungraded:161 (165); ISNR 20:152 (152) and Latex 60 per cent: 111 (111).
Continue import duty on natural rubber: growers
Staff Reporter
KOCHI: The Indian Rubber Growers' Association has appealed to Prime Minister Manmohan Singh that 20 per cent import duty on natural rubber should be continued and that the import duty on used tyres should be raised to 20 per cent.
The association, in a memorandum to the Prime Minister on Monday, requested that import duty on cycle tyres be increased, an initiative be launched to develop rubber cultivation in the North East of the country, a welfare fund be established for rubber tappers and no ban be imposed on futures trading in natural rubber.
Association general secretary and Rubber Board member Siby Monippally said in the memorandum that natural rubber played a key role in Kerala's economy and the crop contributed substantially to the State's economy.
Hard work
The memorandum said Kerala produced more than 92 per cent of the natural rubber in the country. “This has been achieved over the past 50 years by the hard work of small rubber growers of Kerala,” the memorandum said.
The small growers, owning below one hectare, contributed about 90 per cent of the total rubber production in India.
Culivatiotion
Rubber cultivation was picking up in the States of Assam, Tripura and Meghalaya. North Eastern States had the potential to bring about 4.5 lakh hectares under rubber.
The memorandum lauded the role played by the Rubber Board and said that professionalism introduced at the primary and apex level had strengthened the cooperatives to deal directly with the market worldwide.
It said the introduction of futures market had helped establish an “efficient, transparent parallel mechanism” for all stakeholders.
Export of tyres had grown and annual results of tyre companies pointed to a healthy industry, the memorandum said.(The HINDU)
Malaysia to Double NR Production by 2020
Posted: 01 Jun 2010 11:29 PM PDT
By Anant Thawatchaipracha
1 June 2010 - Malaysia plans to double its natural rubber production to 1.8 million tonnes in 2020, said Tan Sri Bernard Giluk Dompok, the Malaysian Minister of Plantation Industries and Commodities, when he launched the Strategies for the Malaysian Rubber Industry and the Malaysian Rubber Board for 2010-2020 in Kuala Lumpur on Tuesday 18 May 2020.
Malaysia produced 846,900 tonnes of natural rubber in 2009 and expected production in 2010 to increase by 5.9% to 900,000 tonnes.
To meet the production target the plan strategies to increase productivity by 1.8 tonnes per hectare per year by 2020, from the current level of about 1.4 tonnes per hectare per year and also expansion of hectarage to 1.2 million hectares with a tappable area of 1 million hectares, from the current hectarage of 1 million hectares with a tappable area of about 0.7 million hectares.
The plan also envisage increasing rubber replanting to 40,000 hectares yearly from the current 20,000 hectares, expanding existing rubber plantations and opening new rubber areas, especially in the states of Sarawak and Sabah on the island of Borneo and also converting idle lands into rubber plantations.
It also include increasing and maintaining tapping to 26 days a month and raising the number of trees per hectare to 550 from the current 350-400 trees per hectare.
The Minister also said that the Malaysian downstream rubber industry must venture into new sources of growth as the current model was too narrow based, with almost 80 % of exports consisting of latex dipped rubber goods.
Malaysia, he said, have the technological advantage and therefore the potential to become a leading hub for rubber technologies and rubber product manufacturing.
(Irco.biz)
Rubber Drops as Demand May Weaken After China Car Sales Slow
Posted: 01 Jun 2010 09:59 PM PDT
By Aya Takada
June 2 (Bloomberg) -- Rubber declined for a second day as a slowdown in China’s car sales stoked concern that demand may drop from the biggest consumer of the commodity used in tires.
Futures in Tokyo lost as much as 2.8 percent to the lowest level since May 27 also after data showed yesterday manufacturing growth in China and the euro region weakened in May, stoking speculation the economic rebound may be slowing.
China’s passenger-car sales growth slowed last month as falling stock prices eroded wealth and consumer prices rose in the world’s largest automobile market. The Shanghai Composite Index fell 9.7 percent in May as Chinese stocks remained among Asia’s worst performers this year.
“The market is weighed down by concern about the global economic recovery as data from China showed a slowdown in growth,” Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co., said today by phone. “Rubber may extend losses in tandem with other industrial materials.”
Rubber for November delivery, the most-active contract, fell as much as 7.8 yen to 274.4 yen per kilogram ($2,994 a metric ton) before trading at 277.3 yen on the Tokyo Commodity Exchange at 11:33 a.m.
China’s sales of cars, sport-utility vehicles and multipurpose vehicles rose 25 percent from a year earlier to 885,800 last month, the China Automotive Technology & Research Center said yesterday. That compares with 34 percent growth in April, according to the center. The data came out after the Tokyo exchange closed yesterday.
‘Diminishing Wealth’
A “diminishing wealth effect” from Chinese stocks, along with high gasoline prices, may contribute to a slowdown in auto sales, Credit Suisse Group AG analysts Adrian Chan and Hung Bin Toh wrote in a report last week. Vehicle sales could decline from year-earlier levels in the second half of 2010, they said.
Losses in rubber futures were limited as the yen dropped after Prime Minister Yukio Hatoyama told lawmakers he would resign, damping the allure of the currency as a haven. A weaker Japanese currency raises the appeal of yen-based contracts for the commodity traded globally in dollars.
The yen slid to 91.63 per dollar from 90.94 yesterday in New York. Ichiro Ozawa, the ruling party’s No. 2 official, will also step down, Hatoyama said today.
September-delivery rubber on the Shanghai Futures Exchange lost 1.6 percent to 22,210 yuan ($3,252) a ton.
(bloomberg.com)
Rubber Futures in Tokyo Drop 2% to 276.6 Yen/Kg
Posted: 01 Jun 2010 09:56 PM PDT
By Aya Takada
June 2 (Bloomberg) -- Rubber futures in Tokyo declined as much as 2 percent today after crude oil slumped.
The November-delivery contract dropped to 276.6 yen a kilogram at 9 a.m.
(bloomberg.com)
Raise import duty on used tyres, urges rubber association
Posted: 01 Jun 2010 09:53 PM PDT
The Indian Rubber Growers Association (IRGA) has urged the Central government to enhance the import duty on used tyres to 20 per cent, at par with the import duty on natural rubber (NR). Currently the duty is 10 per cent.
The association, in a memorandum to the Union minister for commerce, also demanded that the present import duty on NR should be maintained. Futures trading in rubber should not be banned and in order to bail out the struggling small and medium rubber-based units, import duty on cycle tyres must be raised.
Sibi J Monippally, general secretary, IRGA said export of tyres from India had shown a growth of 30 per cent this year. Annual results of all tyre companies disclose an overall growth of 25 per cent in their profits during the last financial year. He cited the example of Apollo Tyres, whose net profit increased to Rs 653 crore.
A major chunk of NR imports (152,000 tonnes) during the last financial year were made without the duty, through the advance license route.
Used tyre imports from China have increased during these years, adversely affecting domestic the tyre industry. The additional import of 45,000 tonnes of used tyre has also adversely affected rubber growers.
There is no rationale in the consuming industry’s demand to reduce import duty of NR and ban futures trading, he said.
Kerala produces 92 per cent of the total 900,000 tonnes of rubber produced in India. Moreover, 1 million people are directly involved in rubber farming and about 6 million people are indirectly associated with this business.
The association pointed out that there is no imbalance in the production and consumption of rubber in India as cited by the rubber-based industries recently.
Kerala’s economy actually revolves around rubber industry. It is the spiralling rubber price which has significantly contributed to the recent 10 per cent overall growth of Kerala’s economy, the memorandum adds.
(sify.com)
Wednesday, June 2, 2010
Spot rubber steady on absence of sellers
Spot rubber steady on absence of sellers
Kottayam, June 1
Spot rubber finished almost steady on Tuesday. Though the reports from the other markets were not favourable, the prices sustained at current levels as there were no sellers in major grades. Sheet rubber closed flat at Rs 169 a kg amidst scattered transactions. The trend was mixed.
RSS 4 weakened at its June futures to Rs 165.58 (166.26), July to Rs 162.65 (165.49), August to Rs 156.99 (158.52) and September to Rs 153.41 (155.59) a kg on National Multi Commodity Exchange. The June futures for RSS 3 closed at ¥379.9 (¥380.2), July at ¥364.7 (¥360.7), August at ¥340.2 (¥333.2), September at ¥310.8 (¥303.1), October at ¥285.6 (¥287.2) and November at ¥282.2 (285.1) a kg during the day session on Tokyo Commodity Exchange. The June futures declined to ¥372.5, July to ¥357, August to ¥333, September to ¥304, October to ¥278.7 and November to ¥275 a kg during the night session.
RSS 3 (spot) weakened to Rs 180.85 (181.05) a kg at Bangkok. The physical rubber rates in Rs/kg were: RSS-4:169 (169); RSS-5:167 (167); Ungraded:165 (166); ISNR 20: 152 (152) and Latex 60 per cent:111 (111).
Growers urged to produce quality sheet rubber
Kottayam, June 1
If the tyre sector insisted on quality rubber only for their use, then the RSS grade and lot rubber produced by the rubber growers could not get reasonable price and no body would be prepared to purchase these grades, said Mr Sajen Peter, Chairman, Rubber Board.
He said this while inaugurating the State level intensive mass contact campaign at Kottayam to create awareness among the growers about the need for improving the quality of sheet rubber.
In due course the other manufacturing sectors also would require only high quality rubber.
Therefore, the growers should be aware of the emerging changes in consumption pattern of rubber and make sincere efforts to enhance its quality, Mr Sajen Peter exhorted the growers who attended the inauguration..
About 4,000 group meetings would be organised in the rubber belts of Kerala, Karnataka and Tamil Nadu. Rubber Board intends to interact directly with one lakh growers during the period from June 1 to July 16, 2010 as part of the campaign.
Auto companies continue to remain on fast-track
Maruti sets record, selling lakh plus cars.
Our Bureau
Mumbai, June 1
The spectacular show by Indian car companies continues with Maruti Suzuki selling more than a lakh cars in May.
This is for the first time a car company clocked six-digit unit sales a month - with market leader Maruti rewriting its own record of 96,650 units in February.
Similarly, the top two-wheeler maker Hero Honda set a new record by selling 4.36 lakh units last month, a notch higher than its previous highest 4.15 lakh in August 2009.
Mr Shashank Srivastava, Maruti Suzuki's Chief General Manager (sales), said the economic growth in the country is driving car sales. "We could despatch whatever we could produce," he added. Four models of Maruti - the Alto, the Swift, the DZire and the Eeco - posted their highest ever monthly sales in May.
He said that the car industry showed 25 per cent growth till date, and this should sustain for the entire first quarter. "We will face some constraints because of the annual plant shutdown for maintenance end of this month," he said.
For Maruti, sustained export growth also contributed to the overall volume. The company sold 90,041 units in the domestic market while it sold 12,134 units abroad.
The second largest carmaker, Hyundai Motor India, sold 46,808 units in May, showing a 7 per cent year-on-year growth. However, Hyundai's export at 19,657 units saw a drop of two percent in May, though its domestic sales grew 15 per cent to 27,151 units.
"Although the market continues to grow we were constrained by our planned annual maintenance shutdown in May which restricted our numbers as we had to divert our export production to meet the demand for the domestic market," said Mr Arvind Saxena, Director, Sales & Marketing, Hyundai Motors India.
Tata Motors' sales were up by 39 per cent - as new editions of Indica and Indigo, along with 3,550 Nanos, took volumes up to 21,326 units. Utility-vehicle major Mahindra too showed good sales in May.
Two-wheelers segment
In the two-wheelers segment, all players have increased their sales. "We have had significant contribution from all segments. For example, our scooter Pleasure has recorded sales of over 24,000 units this month, growing at 65 per cent," said Mr Anil Dua, Senior Vice President, Hero Honda.
Bajaj, the second largest two-wheeler company, reduced the distance with the market leader Hero Honda with a higher growth rate in May.
"Auto story continues to be strong. This will continue up to festive season. The real challenge from festive season will be to maintain a good growth against a high base," said Mr S.Ramnath, Head of research, IDFC-SSKI. "In a few months we will have more clarity on Eurozone crisis and its impact on the auto industry," he said.
The good sales, though, did not seem to cheer the market as the BSE auto index fell 1.35 per cent on Tuesday in a market that saw a 372-point fall. However, Maruti Suzuki shares were 1.8 per cent up at Rs 1259.20 on the BSE on Tuesday.
Kottayam, June 1
Spot rubber finished almost steady on Tuesday. Though the reports from the other markets were not favourable, the prices sustained at current levels as there were no sellers in major grades. Sheet rubber closed flat at Rs 169 a kg amidst scattered transactions. The trend was mixed.
RSS 4 weakened at its June futures to Rs 165.58 (166.26), July to Rs 162.65 (165.49), August to Rs 156.99 (158.52) and September to Rs 153.41 (155.59) a kg on National Multi Commodity Exchange. The June futures for RSS 3 closed at ¥379.9 (¥380.2), July at ¥364.7 (¥360.7), August at ¥340.2 (¥333.2), September at ¥310.8 (¥303.1), October at ¥285.6 (¥287.2) and November at ¥282.2 (285.1) a kg during the day session on Tokyo Commodity Exchange. The June futures declined to ¥372.5, July to ¥357, August to ¥333, September to ¥304, October to ¥278.7 and November to ¥275 a kg during the night session.
RSS 3 (spot) weakened to Rs 180.85 (181.05) a kg at Bangkok. The physical rubber rates in Rs/kg were: RSS-4:169 (169); RSS-5:167 (167); Ungraded:165 (166); ISNR 20: 152 (152) and Latex 60 per cent:111 (111).
Growers urged to produce quality sheet rubber
Kottayam, June 1
If the tyre sector insisted on quality rubber only for their use, then the RSS grade and lot rubber produced by the rubber growers could not get reasonable price and no body would be prepared to purchase these grades, said Mr Sajen Peter, Chairman, Rubber Board.
He said this while inaugurating the State level intensive mass contact campaign at Kottayam to create awareness among the growers about the need for improving the quality of sheet rubber.
In due course the other manufacturing sectors also would require only high quality rubber.
Therefore, the growers should be aware of the emerging changes in consumption pattern of rubber and make sincere efforts to enhance its quality, Mr Sajen Peter exhorted the growers who attended the inauguration..
About 4,000 group meetings would be organised in the rubber belts of Kerala, Karnataka and Tamil Nadu. Rubber Board intends to interact directly with one lakh growers during the period from June 1 to July 16, 2010 as part of the campaign.
Auto companies continue to remain on fast-track
Maruti sets record, selling lakh plus cars.
Our Bureau
Mumbai, June 1
The spectacular show by Indian car companies continues with Maruti Suzuki selling more than a lakh cars in May.
This is for the first time a car company clocked six-digit unit sales a month - with market leader Maruti rewriting its own record of 96,650 units in February.
Similarly, the top two-wheeler maker Hero Honda set a new record by selling 4.36 lakh units last month, a notch higher than its previous highest 4.15 lakh in August 2009.
Mr Shashank Srivastava, Maruti Suzuki's Chief General Manager (sales), said the economic growth in the country is driving car sales. "We could despatch whatever we could produce," he added. Four models of Maruti - the Alto, the Swift, the DZire and the Eeco - posted their highest ever monthly sales in May.
He said that the car industry showed 25 per cent growth till date, and this should sustain for the entire first quarter. "We will face some constraints because of the annual plant shutdown for maintenance end of this month," he said.
For Maruti, sustained export growth also contributed to the overall volume. The company sold 90,041 units in the domestic market while it sold 12,134 units abroad.
The second largest carmaker, Hyundai Motor India, sold 46,808 units in May, showing a 7 per cent year-on-year growth. However, Hyundai's export at 19,657 units saw a drop of two percent in May, though its domestic sales grew 15 per cent to 27,151 units.
"Although the market continues to grow we were constrained by our planned annual maintenance shutdown in May which restricted our numbers as we had to divert our export production to meet the demand for the domestic market," said Mr Arvind Saxena, Director, Sales & Marketing, Hyundai Motors India.
Tata Motors' sales were up by 39 per cent - as new editions of Indica and Indigo, along with 3,550 Nanos, took volumes up to 21,326 units. Utility-vehicle major Mahindra too showed good sales in May.
Two-wheelers segment
In the two-wheelers segment, all players have increased their sales. "We have had significant contribution from all segments. For example, our scooter Pleasure has recorded sales of over 24,000 units this month, growing at 65 per cent," said Mr Anil Dua, Senior Vice President, Hero Honda.
Bajaj, the second largest two-wheeler company, reduced the distance with the market leader Hero Honda with a higher growth rate in May.
"Auto story continues to be strong. This will continue up to festive season. The real challenge from festive season will be to maintain a good growth against a high base," said Mr S.Ramnath, Head of research, IDFC-SSKI. "In a few months we will have more clarity on Eurozone crisis and its impact on the auto industry," he said.
The good sales, though, did not seem to cheer the market as the BSE auto index fell 1.35 per cent on Tuesday in a market that saw a 372-point fall. However, Maruti Suzuki shares were 1.8 per cent up at Rs 1259.20 on the BSE on Tuesday.
Tuesday, June 1, 2010
Rubber farmers slam demand by tyre firms for easing duty
Rubber farmers slam demand by tyre firms for easing duty
Posted: 31 May 2010 08:02 PM PDT
Thiruvananthapuram: Rubber growers have strongly criticised the tyre industry’s demand to lower the import duty on natural rubber and a ban on futures trading on the grounds that such a demand has no rational. The tyre makers had demanded lowering of the import duty and a ban on futures trading because of a over 13% rise in natural rubber prices in the last few days.
In a memorandum to Union commerce ministry this week, the growers point out that while consumer industry had imported about 1,52,000 million tonne this year, most of these were without any customs duty, availing export incentives.
India’s tyre export had grown 30% this year, the memorandum said. The end-user contends that if imports are not eased, it could impact their raw material sourcing needs. To which the rubber industry’s contention is that they (the rubber industry) are committed to increase productivity.
“All stakeholders have evolved a long-term strategy to boost productivity to meet the requirement of 15 lakh tonne of quality rubber by 2020,” Siby Monipally, general secretary, Indian Rubber Growers’ Association, also a member of the Rubber Board, told FE.
“When rubber price is up, it is the real farmer, not the intermediaries, who gain,” Monipally argued.
(economictimes.indiatimes.com)
Rubber seen steady as rains to cut supply, demand
Posted: 31 May 2010 08:07 PM PDT
MUMBAI: Indian rubber futures are likely to trade in a range this week as rains in the top producing state may cut spot supplies as well as buying by tyre makers, analysts and traders said on Monday.
Monsoon rains, vital for farm output in India's trillion-dollar economy, have hit the country's southern Kerala coast as scheduled, the chief of the weather office said on Monday. Kerala is the biggest producer of rubber in the country. "Rains have come. Obviously arrivals will go down in coming weeks. Tyre companies also cut buying in monsoon months," said Shiji Abraham, analyst with JRG Wealth Management.
"I am not expecting much volatility in prices this week." Tyre companies reduce their inventories during rains as humidity leads to fungus attacks, hurting demand during monsoon, Abraham said.
The benchmark July contract on the National Multi-Commodity Exchange (NMCE) was down 2.2 percent at 16,558 rupees per 100 kg. The contract may test support at 16,450 rupees, Abraham said. Spot price of the most traded RSS-4 rubber (ribbed smoked sheet) eased by 100 rupees to 16,950 rupees per 100 kg in Kottayam, Kerala, Rubber Board data showed.
It rose to an all time high of 17,050 last week because of lower supplies and robust demand, and is still trading up 3,050 rupees in 2010. India's rubber production is likely to rise 7.5 percent to 893,000 tonnes in 2010/11 helping reduce costlier imports, a senior Rubber Board official said last month. Tokyo rubber futures held firm on Monday near a three-week high as crude oil firmed, while physical prices were also mostly steady.
(economictimes.indiatimes.com)
Rubber Climbs on Supply, Limited by China Manufacturing Report
June 1 (Bloomberg) -- Rubber advanced after cash prices in Thailand, the biggest exporter, climbed on low supplies. The gains were limited as China’s manufacturing expansion slowed, raising concern demand from the largest consumer may weaken.
Futures in Tokyo increased 5.2 percent in the past four days, paring a monthly drop. The price declined 2.7 percent in May amid concern Europe’s sovereign debt crisis may stall economic recovery.
Chinese manufacturing expanded at a slower pace in May, adding to signs that growth may moderate in the world’s third- biggest economy. Rubber supplies from Thailand failed to pick up after a low-production season ended, as a dry weather curbed latex output, said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo.
“The market is capped by concern about Europe’s debt problems and possible slowdown in China’s economy,” Shigemoto said today by phone. “There were no aggressive sellers as a stronger physical market boosted the price of the nearby contract in Tokyo.”
Rubber for November delivery, the most-active contract, advanced 0.2 percent to 285.7 yen per kilogram ($3,136 a metric ton) on the Tokyo Commodity Exchange at noon. Earlier the price fell as much as 0.5 percent.
June-delivery rubber on the Tokyo exchange jumped as much as 2.3 percent to 388.8 yen before trading at 383 yen.
Cash Prices
Cash prices in Thailand, the largest exporter, extended gains as increasing demand outpaced supply, the Rubber Research Institute of Thailand said on its website.
Thai RSS-3 grade rubber for June delivery added 0.8 percent to 126.40 baht ($3.89) a kilogram yesterday, according to the institute, which reviews the price once a day and issues new data in the afternoon.
China’s Purchasing Managers’ Index fell to 53.9 from 55.7 in April, seasonally adjusted, the Federation of Logistics and Purchasing said today. That was less than the median 54.5 estimate in a Bloomberg News survey of 18 economists. Readings above 50 indicate an expansion.
A government crackdown on property speculation is cooling the economy by damping sales and construction, while Europe’s sovereign-debt crisis could exacerbate a slowdown by cutting demand for exports. China’s policy makers may delay raising benchmark interest rates or letting the yuan appreciate even after the economy grew 11.9 percent in the first quarter.
September-delivery rubber on the Shanghai Futures Exchange dropped 0.2 percent to 22,790 yuan ($3,338) a ton.
(bloomberg.com)
Posted: 31 May 2010 08:02 PM PDT
Thiruvananthapuram: Rubber growers have strongly criticised the tyre industry’s demand to lower the import duty on natural rubber and a ban on futures trading on the grounds that such a demand has no rational. The tyre makers had demanded lowering of the import duty and a ban on futures trading because of a over 13% rise in natural rubber prices in the last few days.
In a memorandum to Union commerce ministry this week, the growers point out that while consumer industry had imported about 1,52,000 million tonne this year, most of these were without any customs duty, availing export incentives.
India’s tyre export had grown 30% this year, the memorandum said. The end-user contends that if imports are not eased, it could impact their raw material sourcing needs. To which the rubber industry’s contention is that they (the rubber industry) are committed to increase productivity.
“All stakeholders have evolved a long-term strategy to boost productivity to meet the requirement of 15 lakh tonne of quality rubber by 2020,” Siby Monipally, general secretary, Indian Rubber Growers’ Association, also a member of the Rubber Board, told FE.
“When rubber price is up, it is the real farmer, not the intermediaries, who gain,” Monipally argued.
(economictimes.indiatimes.com)
Rubber seen steady as rains to cut supply, demand
Posted: 31 May 2010 08:07 PM PDT
MUMBAI: Indian rubber futures are likely to trade in a range this week as rains in the top producing state may cut spot supplies as well as buying by tyre makers, analysts and traders said on Monday.
Monsoon rains, vital for farm output in India's trillion-dollar economy, have hit the country's southern Kerala coast as scheduled, the chief of the weather office said on Monday. Kerala is the biggest producer of rubber in the country. "Rains have come. Obviously arrivals will go down in coming weeks. Tyre companies also cut buying in monsoon months," said Shiji Abraham, analyst with JRG Wealth Management.
"I am not expecting much volatility in prices this week." Tyre companies reduce their inventories during rains as humidity leads to fungus attacks, hurting demand during monsoon, Abraham said.
The benchmark July contract on the National Multi-Commodity Exchange (NMCE) was down 2.2 percent at 16,558 rupees per 100 kg. The contract may test support at 16,450 rupees, Abraham said. Spot price of the most traded RSS-4 rubber (ribbed smoked sheet) eased by 100 rupees to 16,950 rupees per 100 kg in Kottayam, Kerala, Rubber Board data showed.
It rose to an all time high of 17,050 last week because of lower supplies and robust demand, and is still trading up 3,050 rupees in 2010. India's rubber production is likely to rise 7.5 percent to 893,000 tonnes in 2010/11 helping reduce costlier imports, a senior Rubber Board official said last month. Tokyo rubber futures held firm on Monday near a three-week high as crude oil firmed, while physical prices were also mostly steady.
(economictimes.indiatimes.com)
Rubber Climbs on Supply, Limited by China Manufacturing Report
June 1 (Bloomberg) -- Rubber advanced after cash prices in Thailand, the biggest exporter, climbed on low supplies. The gains were limited as China’s manufacturing expansion slowed, raising concern demand from the largest consumer may weaken.
Futures in Tokyo increased 5.2 percent in the past four days, paring a monthly drop. The price declined 2.7 percent in May amid concern Europe’s sovereign debt crisis may stall economic recovery.
Chinese manufacturing expanded at a slower pace in May, adding to signs that growth may moderate in the world’s third- biggest economy. Rubber supplies from Thailand failed to pick up after a low-production season ended, as a dry weather curbed latex output, said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo.
“The market is capped by concern about Europe’s debt problems and possible slowdown in China’s economy,” Shigemoto said today by phone. “There were no aggressive sellers as a stronger physical market boosted the price of the nearby contract in Tokyo.”
Rubber for November delivery, the most-active contract, advanced 0.2 percent to 285.7 yen per kilogram ($3,136 a metric ton) on the Tokyo Commodity Exchange at noon. Earlier the price fell as much as 0.5 percent.
June-delivery rubber on the Tokyo exchange jumped as much as 2.3 percent to 388.8 yen before trading at 383 yen.
Cash Prices
Cash prices in Thailand, the largest exporter, extended gains as increasing demand outpaced supply, the Rubber Research Institute of Thailand said on its website.
Thai RSS-3 grade rubber for June delivery added 0.8 percent to 126.40 baht ($3.89) a kilogram yesterday, according to the institute, which reviews the price once a day and issues new data in the afternoon.
China’s Purchasing Managers’ Index fell to 53.9 from 55.7 in April, seasonally adjusted, the Federation of Logistics and Purchasing said today. That was less than the median 54.5 estimate in a Bloomberg News survey of 18 economists. Readings above 50 indicate an expansion.
A government crackdown on property speculation is cooling the economy by damping sales and construction, while Europe’s sovereign-debt crisis could exacerbate a slowdown by cutting demand for exports. China’s policy makers may delay raising benchmark interest rates or letting the yuan appreciate even after the economy grew 11.9 percent in the first quarter.
September-delivery rubber on the Shanghai Futures Exchange dropped 0.2 percent to 22,790 yuan ($3,338) a ton.
(bloomberg.com)
Monsoon Arrives in Kerala
Monsoon Arrives in Kerala
India Meteorological Department (IMD) has declared the onset of monsoon over the Kerala coast on a day when it also saw a prospective cyclone brewing in the Arabian Sea.
The IMD joined peer numerical weather prediction models to project that the depression (spinning up overnight from a ‘low') over east-central and adjoining west-central and south Arabian Sea would intensify into a cyclonic storm.
MONSOON ADVANCE
On Monday afternoon, the causative depression was centred about 1,050 km southwest of Mumbai and an equal distance away from south-southwest of Naliya.
In one fell swoop, the monsoon current was shown as having covered entire Kerala with the northern limit passing through the northern-most district of Kannur, and Salem and Nagapattinam in neighbouring Tamil Nadu.
Conditions are favourable for its further advance into some parts of central Arabian Sea, coastal and south interior Karnataka and Goa during the next two days.
Further advance of monsoon will depend upon the intensity and direction of movement of the storm, the forecast said.
A satellite imagery showed convective clouds over parts of southeast and east-central Arabian Sea and Andaman Sea.
Forecast up to Saturday suggested fairly widespread rain or thundershowers over Kerala, Lakshadweep, coastal Karnataka, the Northeastern States and Andaman and Nicobar Islands.
Rubber Climbs for Fourth Day on Low Supplies, Crude Oil Rally
May 31 (Bloomberg) -- Rubber advanced for a fourth day, paring a monthly loss, as low supplies from major producers and a rally in crude oil enhanced the appeal of the commodity used to make tires.
Futures in Tokyo extended two weeks of gains amid concerns that supplies may not be adequate to meet growing demand. Crude oil rose for third time in four days after the dollar fell against the euro, bolstering the appeal of commodities as a hedge against inflation.
“Supplies remain low,” Chaiwat Muenmee, an analyst at broker DS Futures Co., said by phone from Bangkok. “Coupled with rising oil prices, it helped boost gains on Tocom.”
Depleted supply after the end of the annual February-to- April low-production season, together with robust demand in Asia, will support the market, the Association of Natural Rubber Producing Countries said in its May newsletter.
Demand from China, India and Malaysia, which account for more than 45 percent of global consumption, should stay strong, the association said.
Rubber for November delivery, the most-active contract, rose as much as 0.8 percent to 287.2 yen per kilogram ($3,142 a metric ton) before settling at 285.1 yen on the Tokyo Commodity Exchange. It fell as much as 1.2 percent earlier.
“The market remains capped by concern that Europe’s debt crisis will stall economic recovery,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today.
Debt Concerns
Still, the most-active contract dropped for a second month, losing 2.7 percent, after investors reduced holdings of risky assets amid concern that Europe’s debt crisis will spur governments to reduce spending, slowing the region’s economic recovery. The yen fell to a one-week low after Japan’s Social Democratic Party left the three-way coalition government.
Fitch Ratings cut Spain’s AAA credit rating by one level last week, saying the nation’s debts will likely weigh on growth. Spain has the third-largest budget deficit in the euro region, where policy makers have pledged almost $1 trillion of loans to support the weakest economies and the regional currency. The rating cut for Spain increased concern that raw material demand in Europe may slow.
“A sense of caution is increasing,” said Norikazu Kitta, a strategist at Nikko Cordial Securities Inc. “Financial issues in Europe are spreading.”
Rubber cash prices in Thailand, the largest exporter, extended gains as increasing demand outpaced supply, the Rubber Research Institute of Thailand said on its website today.
Thai RSS-3 grade rubber for June delivery added 0.8 percent to 126.40 baht ($3.89) a kilogram today.
September-delivery rubber on the Shanghai Futures Exchange dropped 0.5 percent to settle at 22,845 yuan ($3,346) a ton.
The importance of regulating commodity futures markets
Speculative trading in global commodity futures markets has been closely related to the dramatic volatility in commodity markets in the past three years. Now financial regulation in the US seeks to control some of this activity. C. P. Chandrasekhar and Jayati Ghosh examine recent trends in commodity prices, consider the implications of the proposed regulation and the extent to which it will help to curb volatility in global commodity prices.
In the US, moves are afoot to bring about better regulation of the various financial markets that have caused so much panic and distress in the world economy in the past few years. The attempts at regulatory reform cover a wide range of areas, but in certain areas they have direct significance for the rest of the world, especially developing countries. One of the most important aspects of the legislation that has been passed by the US Senate (which still has to be reconciled with the version passed by the US House of Representatives) has to do with derivatives markets and their effects on commodity trading.
It is now widely accepted that increasing financial involvement in primary commodity markets (including oil, minerals and agricultural products) played a significant role in generating or amplifying price volatility in these markets.
While financial involvement in commodity markets has been growing since the early 2000s, the impact of these players has been particularly evident since early 2007, causing dramatic and rapid changes in world prices of these goods in both futures and spot markets. There were huge increases in most commodity prices between January 2007 and June 2008, followed by collapses in price until early 2009, followed by significant increases once again until early 2010.
Price fluctuation
Chart 1 indicates the extent to which the spot prices of the major categories of primary commodities fluctuated in the period since the start of 2005. (The source of data for all charts is IMF commodity price statistics online.)
The indices described here are on the basis of prices in SDR terms, so they minimise the effect of exchange rate changes that have also characterised the recent past. (It should be noted, however, that the prices of most primary commodities in world trade are still negotiated and transacted in US dollar terms.) It is evident that the period, especially after January 2007, was marked by remarkable volatility to an extent that may be unprecedented for such a short period of time.
Fuel prices have been the most volatile, led by the prices of petroleum, which fluctuated the most over this period. Oil prices have always been an important indicator of economic perceptions, and contracts worked out in the futures markets have become pointers to the state of expectations not just about oil supply and demand (which incidentally hardly changed over this period), but even more about possible changes in global output and inflation. Increasingly, however, futures markets as in oil as well as other commodities have started reflecting the concentration of financial activity.
Of course oil prices directly affect the real economy in all countries, since energy is a universal intermediate that enters into the price of all other goods. So fuel price volatility has huge and typically unpleasant results in developing countries. But in some ways the trends in international food prices have had even more devastating implications in many developing countries.
Chart 2 indicates that food prices have also been very volatile over this period. While the overall edibles price index nearly doubled before falling and then rising again, prices of certain commodities such as wheat and sunflower oil showed much greater volatility. It is worth noting that these are both commodities in which the futures markets are well developed and in which index traders have shown a great deal of interest.
Confusing signals
These price changes had hugely adverse effects in the developing world. They sent out confusing, misleading and often completely wrong price signals to farmers that caused over-sowing in some phases and under-cultivation in others.
They created havoc among mineral exporters who were not sure of the prices at which they should sign export contracts. Consumers were especially badly affected: while the increase in global prices tended to be transmitted (even if not fully) to consumers in developing countries, when global prices fell there was no such immediate tendency.
In any case, as Chart 3 shows, despite the wide fluctuations from trough to peak, over the period since January 2007 there has been a significant increase in prices of globally traded food items. This has had an especially adverse effect because this is also the period in which the global financial crisis and recession have affected employment, wages and livelihood of petty producers across the world. The continued rise in food prices in many developing countries has impacted on the incidence of poverty and hunger, and become a political issue of some importance.
So both the direct producers and consumers lost out because of this price instability. The only gainers were the financial and marketing intermediaries, typically large corporations, which were able to profit from rapidly changing prices.
Global commodity prices have always been volatile to some degree and prone to boom-bust cycles. In the 1950s and 1960s, commodity boards and international commodity agreements were seen as one means of stabilising global prices. Since their decline from the mid-1970s, and especially as financial deregulation and innovation became more pronounced from the early 1980s, the emergence of commodity futures markets was touted as providing the advantages of such agreements in a more market-friendly framework.
There were several features of such futures markets that were perceived to be of value: they allowed for better risk management through hedging by different layers of producers, consumers and intermediaries; they enabled open-market price discovery of commodities through buying and selling on the exchanges; they were therefore perceived to lower transaction costs.
Financial deregulation in the early part of the current decade gave a major boost to the entry of new financial players into the commodity exchanges. In the US, which has the greatest volume and turnover of both spot and future commodity trading, the significant regulatory transformation occurred in 2000. While commodity futures contracts existed before, they were traded only on regulated exchanges under the control of the Commodity Futures Trading Commission (CFTC), which required traders to disclose their holdings of each commodity and stick to specified position limits, so as to prevent market manipulation. Therefore they were dominated by commercial players who were using it for the reasons mentioned above, rather than for mainly speculative purposes.
In 2000, the Commodity Futures Modernization Act effectively deregulated commodity trading in the US, by exempting over-the-counter (OTC) commodity trading (outside of regulated exchanges) from CFTC oversight. Soon after this, several unregulated commodity exchanges opened. These allowed any and all investors, including hedge funds, pension funds and investment banks, to trade commodity futures contracts without any position limits, disclosure requirements, or regulatory oversight.
The value of such unregulated trading zoomed to reach around $9 trillion at the end of 2007, which was estimated to be more than twice the value of the commodity contracts on the regulated exchanges. According to the Bank for International Settlements, the value of outstanding amounts of OTC commodity-linked derivatives for commodities other than gold and precious metals increased from $5.85 trillion in June 2006 to $7.05 trillion in June 2007 to as much as $12.39 trillion in June 2008.
Index traders
Unlike producers and consumers who use such markets for hedging purposes, financial firms and other speculators increasingly entered the market to profit from short-term changes in price. They were aided by the ‘swap-dealer loophole' in the 2000 legislation, which allowed traders to use swap agreements to take long-term positions in commodity indexes.
There was a consequent emergence of commodity index funds that were essentially ‘index traders' who focus on returns from changes in the index of a commodity, by periodically rolling over commodity futures contracts prior to their maturity date and reinvesting the proceeds in new contracts.
A study by Christopher Gilbert (‘Speculative influences on commodity futures 2006-08', UNCTAD Discussion Paper No 197, Geneva) has found that index traders amplified price volatility to the extent of 30 per cent in oil and metals prices and around 15 per cent in foodgrains prices.
Such commodity funds dealt only in forward positions with no physical ownership of the commodities involved. This further aggravated the treatment of these markets as vehicles for a diversified portfolio of commodities (including not only food but also raw materials and energy) as an asset class, rather than as mechanisms for managing the risk of actual producers and consumers.
The CFTC estimated that of the $161 billion of commodity index business in the US markets at the end of June 30, 2008, approximately 24 per cent was held by index funds, 42 per cent by institutional investors, 9 per cent by sovereign wealth funds and the remaining 25 per cent by other traders.
An official probe by the US Senate found “substantial and persuasive evidence” that non-commercial traders pushed up futures prices, disrupted convergence between futures and cash prices and increased costs for farmers, the grain industry and consumers.
Proposed regulation
Now, one important proposal in the financial reform legislation passed by the US Senate seeks to plug, at least partially, the loopholes that allowed such frenzied activity in commodity futures markets. It requires that previously unregulated over-the-counter (OTC) trades be traded on public exchanges.
This would reverse the effect of the 2000 Act, and enable the CFTC to analyse daily trade data and determine when traders have exceeded the CFTC's commodity-specific position limits (which provide a percentage ceiling for all commodity contracts open for trade during a specific trading period). It has been estimated that around 90 per cent of this market in the US would move from over-the-counter swaps trading to the more transparent and capitalised exchange trading environment for futures contracts.
In addition, another important amendment brought by Senator Blanche Lincoln of Arkansas would force the banks to spin off their highly profitable derivative trading into entities that would be separate from their commercial banking. Section 716 (‘Prohibition against Federal Government Bailouts of Swaps Entities') would sharply reduce the possibility of taxpayer-financed bailouts for speculative activity that does not serve the real economy. This would mean that purely commercial banks with guaranteed deposits would have much lower dependence on the unregulated and risky over-the-counter swaps market.
It would also, of course, reduce the profitability of the big banks that have been able to hunt with the hounds and run with the hares through such OTC transactions. As expected, this particular provision is under sharp attack from the US finance industry, with major banks such as Morgan Stanley and Goldman Sachs lobbying fiercely to remove it. Both the Chairperson of the Federal Deposit Insurance Corporation Sheila Bair, and the head of the Federal Reserve Ben Bernanke, have spoken out against it, saying it could destabilise the financial system. The danger is that during the “reconciliation” process of the Senate and House bills, which is typically conducted behind closed doors, the financial lobbyists will win and the motion may get killed.
Positive changes?
That is only one of the dangers. Another is that providing muscle to regulators need not ensure that the regulators do their job appropriately. So even if the CFTC acquires the ability to control and regulate trading activity in commodity futures, its actions may not be so effective. For example, in late January this year the CFTC announced that it would place position limits on oil, natural gas, heating oil and gasoline futures. However, the limits announced were so high that, even by the CFTC's own calculations, they were unlikely to affect much of the trade.
There have also been arguments that such activity will simply move to other players, such as hedge funds, which are expected to be major beneficiaries of the move. Or that OTC contracts in commodity futures will increasingly take place in other financial centres, in London, Tokyo or even Singapore. But such arguments underestimate the tremendous influence of the US in shaping financial systems globally. Thus far it could be argued that this influence has essentially been a negative force, but if even these relatively limited new regulations actually come into play, they could force some positive changes elsewhere as well.
So, just as the deregulation of US markets contributed to excessive speculation and global price volatility, the regulatory reform measures — if they are properly defined and implemented in the right spirit — could operate to prevent future episodes of the very extreme volatility that is so damaging to developing countries.
Of course, this does not in any way mean that the world food crisis is over, or that commodity prices will not continue to behave in a volatile fashion without other measures adopted by governments. At best it may simply mean that developing countries will get some breathing space from excessive price volatility that should help them to get the policies in place to tackle the real problems in the food economy and elsewhere. And the need to put such measures into place, to revive the food economy within countries and ensure adequate and universal distribution of essential food items, is more pressing than ever.
India Meteorological Department (IMD) has declared the onset of monsoon over the Kerala coast on a day when it also saw a prospective cyclone brewing in the Arabian Sea.
The IMD joined peer numerical weather prediction models to project that the depression (spinning up overnight from a ‘low') over east-central and adjoining west-central and south Arabian Sea would intensify into a cyclonic storm.
MONSOON ADVANCE
On Monday afternoon, the causative depression was centred about 1,050 km southwest of Mumbai and an equal distance away from south-southwest of Naliya.
In one fell swoop, the monsoon current was shown as having covered entire Kerala with the northern limit passing through the northern-most district of Kannur, and Salem and Nagapattinam in neighbouring Tamil Nadu.
Conditions are favourable for its further advance into some parts of central Arabian Sea, coastal and south interior Karnataka and Goa during the next two days.
Further advance of monsoon will depend upon the intensity and direction of movement of the storm, the forecast said.
A satellite imagery showed convective clouds over parts of southeast and east-central Arabian Sea and Andaman Sea.
Forecast up to Saturday suggested fairly widespread rain or thundershowers over Kerala, Lakshadweep, coastal Karnataka, the Northeastern States and Andaman and Nicobar Islands.
Rubber Climbs for Fourth Day on Low Supplies, Crude Oil Rally
May 31 (Bloomberg) -- Rubber advanced for a fourth day, paring a monthly loss, as low supplies from major producers and a rally in crude oil enhanced the appeal of the commodity used to make tires.
Futures in Tokyo extended two weeks of gains amid concerns that supplies may not be adequate to meet growing demand. Crude oil rose for third time in four days after the dollar fell against the euro, bolstering the appeal of commodities as a hedge against inflation.
“Supplies remain low,” Chaiwat Muenmee, an analyst at broker DS Futures Co., said by phone from Bangkok. “Coupled with rising oil prices, it helped boost gains on Tocom.”
Depleted supply after the end of the annual February-to- April low-production season, together with robust demand in Asia, will support the market, the Association of Natural Rubber Producing Countries said in its May newsletter.
Demand from China, India and Malaysia, which account for more than 45 percent of global consumption, should stay strong, the association said.
Rubber for November delivery, the most-active contract, rose as much as 0.8 percent to 287.2 yen per kilogram ($3,142 a metric ton) before settling at 285.1 yen on the Tokyo Commodity Exchange. It fell as much as 1.2 percent earlier.
“The market remains capped by concern that Europe’s debt crisis will stall economic recovery,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today.
Debt Concerns
Still, the most-active contract dropped for a second month, losing 2.7 percent, after investors reduced holdings of risky assets amid concern that Europe’s debt crisis will spur governments to reduce spending, slowing the region’s economic recovery. The yen fell to a one-week low after Japan’s Social Democratic Party left the three-way coalition government.
Fitch Ratings cut Spain’s AAA credit rating by one level last week, saying the nation’s debts will likely weigh on growth. Spain has the third-largest budget deficit in the euro region, where policy makers have pledged almost $1 trillion of loans to support the weakest economies and the regional currency. The rating cut for Spain increased concern that raw material demand in Europe may slow.
“A sense of caution is increasing,” said Norikazu Kitta, a strategist at Nikko Cordial Securities Inc. “Financial issues in Europe are spreading.”
Rubber cash prices in Thailand, the largest exporter, extended gains as increasing demand outpaced supply, the Rubber Research Institute of Thailand said on its website today.
Thai RSS-3 grade rubber for June delivery added 0.8 percent to 126.40 baht ($3.89) a kilogram today.
September-delivery rubber on the Shanghai Futures Exchange dropped 0.5 percent to settle at 22,845 yuan ($3,346) a ton.
The importance of regulating commodity futures markets
Speculative trading in global commodity futures markets has been closely related to the dramatic volatility in commodity markets in the past three years. Now financial regulation in the US seeks to control some of this activity. C. P. Chandrasekhar and Jayati Ghosh examine recent trends in commodity prices, consider the implications of the proposed regulation and the extent to which it will help to curb volatility in global commodity prices.
In the US, moves are afoot to bring about better regulation of the various financial markets that have caused so much panic and distress in the world economy in the past few years. The attempts at regulatory reform cover a wide range of areas, but in certain areas they have direct significance for the rest of the world, especially developing countries. One of the most important aspects of the legislation that has been passed by the US Senate (which still has to be reconciled with the version passed by the US House of Representatives) has to do with derivatives markets and their effects on commodity trading.
It is now widely accepted that increasing financial involvement in primary commodity markets (including oil, minerals and agricultural products) played a significant role in generating or amplifying price volatility in these markets.
While financial involvement in commodity markets has been growing since the early 2000s, the impact of these players has been particularly evident since early 2007, causing dramatic and rapid changes in world prices of these goods in both futures and spot markets. There were huge increases in most commodity prices between January 2007 and June 2008, followed by collapses in price until early 2009, followed by significant increases once again until early 2010.
Price fluctuation
Chart 1 indicates the extent to which the spot prices of the major categories of primary commodities fluctuated in the period since the start of 2005. (The source of data for all charts is IMF commodity price statistics online.)
The indices described here are on the basis of prices in SDR terms, so they minimise the effect of exchange rate changes that have also characterised the recent past. (It should be noted, however, that the prices of most primary commodities in world trade are still negotiated and transacted in US dollar terms.) It is evident that the period, especially after January 2007, was marked by remarkable volatility to an extent that may be unprecedented for such a short period of time.
Fuel prices have been the most volatile, led by the prices of petroleum, which fluctuated the most over this period. Oil prices have always been an important indicator of economic perceptions, and contracts worked out in the futures markets have become pointers to the state of expectations not just about oil supply and demand (which incidentally hardly changed over this period), but even more about possible changes in global output and inflation. Increasingly, however, futures markets as in oil as well as other commodities have started reflecting the concentration of financial activity.
Of course oil prices directly affect the real economy in all countries, since energy is a universal intermediate that enters into the price of all other goods. So fuel price volatility has huge and typically unpleasant results in developing countries. But in some ways the trends in international food prices have had even more devastating implications in many developing countries.
Chart 2 indicates that food prices have also been very volatile over this period. While the overall edibles price index nearly doubled before falling and then rising again, prices of certain commodities such as wheat and sunflower oil showed much greater volatility. It is worth noting that these are both commodities in which the futures markets are well developed and in which index traders have shown a great deal of interest.
Confusing signals
These price changes had hugely adverse effects in the developing world. They sent out confusing, misleading and often completely wrong price signals to farmers that caused over-sowing in some phases and under-cultivation in others.
They created havoc among mineral exporters who were not sure of the prices at which they should sign export contracts. Consumers were especially badly affected: while the increase in global prices tended to be transmitted (even if not fully) to consumers in developing countries, when global prices fell there was no such immediate tendency.
In any case, as Chart 3 shows, despite the wide fluctuations from trough to peak, over the period since January 2007 there has been a significant increase in prices of globally traded food items. This has had an especially adverse effect because this is also the period in which the global financial crisis and recession have affected employment, wages and livelihood of petty producers across the world. The continued rise in food prices in many developing countries has impacted on the incidence of poverty and hunger, and become a political issue of some importance.
So both the direct producers and consumers lost out because of this price instability. The only gainers were the financial and marketing intermediaries, typically large corporations, which were able to profit from rapidly changing prices.
Global commodity prices have always been volatile to some degree and prone to boom-bust cycles. In the 1950s and 1960s, commodity boards and international commodity agreements were seen as one means of stabilising global prices. Since their decline from the mid-1970s, and especially as financial deregulation and innovation became more pronounced from the early 1980s, the emergence of commodity futures markets was touted as providing the advantages of such agreements in a more market-friendly framework.
There were several features of such futures markets that were perceived to be of value: they allowed for better risk management through hedging by different layers of producers, consumers and intermediaries; they enabled open-market price discovery of commodities through buying and selling on the exchanges; they were therefore perceived to lower transaction costs.
Financial deregulation in the early part of the current decade gave a major boost to the entry of new financial players into the commodity exchanges. In the US, which has the greatest volume and turnover of both spot and future commodity trading, the significant regulatory transformation occurred in 2000. While commodity futures contracts existed before, they were traded only on regulated exchanges under the control of the Commodity Futures Trading Commission (CFTC), which required traders to disclose their holdings of each commodity and stick to specified position limits, so as to prevent market manipulation. Therefore they were dominated by commercial players who were using it for the reasons mentioned above, rather than for mainly speculative purposes.
In 2000, the Commodity Futures Modernization Act effectively deregulated commodity trading in the US, by exempting over-the-counter (OTC) commodity trading (outside of regulated exchanges) from CFTC oversight. Soon after this, several unregulated commodity exchanges opened. These allowed any and all investors, including hedge funds, pension funds and investment banks, to trade commodity futures contracts without any position limits, disclosure requirements, or regulatory oversight.
The value of such unregulated trading zoomed to reach around $9 trillion at the end of 2007, which was estimated to be more than twice the value of the commodity contracts on the regulated exchanges. According to the Bank for International Settlements, the value of outstanding amounts of OTC commodity-linked derivatives for commodities other than gold and precious metals increased from $5.85 trillion in June 2006 to $7.05 trillion in June 2007 to as much as $12.39 trillion in June 2008.
Index traders
Unlike producers and consumers who use such markets for hedging purposes, financial firms and other speculators increasingly entered the market to profit from short-term changes in price. They were aided by the ‘swap-dealer loophole' in the 2000 legislation, which allowed traders to use swap agreements to take long-term positions in commodity indexes.
There was a consequent emergence of commodity index funds that were essentially ‘index traders' who focus on returns from changes in the index of a commodity, by periodically rolling over commodity futures contracts prior to their maturity date and reinvesting the proceeds in new contracts.
A study by Christopher Gilbert (‘Speculative influences on commodity futures 2006-08', UNCTAD Discussion Paper No 197, Geneva) has found that index traders amplified price volatility to the extent of 30 per cent in oil and metals prices and around 15 per cent in foodgrains prices.
Such commodity funds dealt only in forward positions with no physical ownership of the commodities involved. This further aggravated the treatment of these markets as vehicles for a diversified portfolio of commodities (including not only food but also raw materials and energy) as an asset class, rather than as mechanisms for managing the risk of actual producers and consumers.
The CFTC estimated that of the $161 billion of commodity index business in the US markets at the end of June 30, 2008, approximately 24 per cent was held by index funds, 42 per cent by institutional investors, 9 per cent by sovereign wealth funds and the remaining 25 per cent by other traders.
An official probe by the US Senate found “substantial and persuasive evidence” that non-commercial traders pushed up futures prices, disrupted convergence between futures and cash prices and increased costs for farmers, the grain industry and consumers.
Proposed regulation
Now, one important proposal in the financial reform legislation passed by the US Senate seeks to plug, at least partially, the loopholes that allowed such frenzied activity in commodity futures markets. It requires that previously unregulated over-the-counter (OTC) trades be traded on public exchanges.
This would reverse the effect of the 2000 Act, and enable the CFTC to analyse daily trade data and determine when traders have exceeded the CFTC's commodity-specific position limits (which provide a percentage ceiling for all commodity contracts open for trade during a specific trading period). It has been estimated that around 90 per cent of this market in the US would move from over-the-counter swaps trading to the more transparent and capitalised exchange trading environment for futures contracts.
In addition, another important amendment brought by Senator Blanche Lincoln of Arkansas would force the banks to spin off their highly profitable derivative trading into entities that would be separate from their commercial banking. Section 716 (‘Prohibition against Federal Government Bailouts of Swaps Entities') would sharply reduce the possibility of taxpayer-financed bailouts for speculative activity that does not serve the real economy. This would mean that purely commercial banks with guaranteed deposits would have much lower dependence on the unregulated and risky over-the-counter swaps market.
It would also, of course, reduce the profitability of the big banks that have been able to hunt with the hounds and run with the hares through such OTC transactions. As expected, this particular provision is under sharp attack from the US finance industry, with major banks such as Morgan Stanley and Goldman Sachs lobbying fiercely to remove it. Both the Chairperson of the Federal Deposit Insurance Corporation Sheila Bair, and the head of the Federal Reserve Ben Bernanke, have spoken out against it, saying it could destabilise the financial system. The danger is that during the “reconciliation” process of the Senate and House bills, which is typically conducted behind closed doors, the financial lobbyists will win and the motion may get killed.
Positive changes?
That is only one of the dangers. Another is that providing muscle to regulators need not ensure that the regulators do their job appropriately. So even if the CFTC acquires the ability to control and regulate trading activity in commodity futures, its actions may not be so effective. For example, in late January this year the CFTC announced that it would place position limits on oil, natural gas, heating oil and gasoline futures. However, the limits announced were so high that, even by the CFTC's own calculations, they were unlikely to affect much of the trade.
There have also been arguments that such activity will simply move to other players, such as hedge funds, which are expected to be major beneficiaries of the move. Or that OTC contracts in commodity futures will increasingly take place in other financial centres, in London, Tokyo or even Singapore. But such arguments underestimate the tremendous influence of the US in shaping financial systems globally. Thus far it could be argued that this influence has essentially been a negative force, but if even these relatively limited new regulations actually come into play, they could force some positive changes elsewhere as well.
So, just as the deregulation of US markets contributed to excessive speculation and global price volatility, the regulatory reform measures — if they are properly defined and implemented in the right spirit — could operate to prevent future episodes of the very extreme volatility that is so damaging to developing countries.
Of course, this does not in any way mean that the world food crisis is over, or that commodity prices will not continue to behave in a volatile fashion without other measures adopted by governments. At best it may simply mean that developing countries will get some breathing space from excessive price volatility that should help them to get the policies in place to tackle the real problems in the food economy and elsewhere. And the need to put such measures into place, to revive the food economy within countries and ensure adequate and universal distribution of essential food items, is more pressing than ever.
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