Rubber Market Recap – moderate upside expected this week

Following reports of Moderna’s vaccine getting nod for roll out from the US Food and Drug Administration, Singapore rubber futures traded with upward trend yesterday.

Analysts viewed that the roll out of vaccines is likely to aid in recovery of the global economy. TOCOM futures (Tokyo Commodities Exchange) traded firm on concerns over supply in the global market. The threat of lower production persists across Southeast Asia because of labour shortage, recent floods, and unfavorable weather conditions in Thailand and Vietnam.   

Prices of natural rubber in the key spot markets of Kerala moved upward in response to positive cues from global trading centres. However, domestic trade sources say that the near-term sentiment in the domestic market remains weak as arrivals are seen rising in the coming weeks as it is the peak production season.

Rubber is a deficit commodity for India due to insufficient production hence depends on imports. It is imported mainly from the South East Nations and is mostly influenced by the markets of Singapore. Rubber is a deficit commodity for India due to insufficient production hence depends on imports. It is imported mainly from the South East Nations and is mostly influenced by the markets of Singapore. 

The major domestic markets of rubber are Kottayam, Kochi, Kozhikode and Kannur in Kerala. Rubber area in India is highly concentrated in this state, approximately 80% in Kerala. Therefore, MCX has considered Kerala as the benchmark market for its product. Deliverable variety specified by the MCX is RSS4 with Basis center is Palakkad in the state of Kerala. India stands at sixth place in the production of natural rubber and second place in world consumption.

The market size for natural rubber in India in terms of production and imports is huge. India’s global price linkages and volatility for India’s Natural Rubber are also significant. Therefore the launch of rubber futures by MCX has the potential for the industry stakeholders as an efficient hedging tool for price risk management. For this week January Rubber at MCX may trade with a moderately upward bias and may not go below Rs.14800-14900/qtl. Upward price range can be 15800-15950 this week.