Weekly Outlook for India’s Rubber Market

Strength in foreign markets kept the tone positive in domestic futures markets on Friday. The upside may be capped this week as supplies in major centres of South are quite adequate to offset the consumption. For the current week the February contract of MCX Rubber has a strong support zone between 14950-15000 levels. In case closes below 14950 on any particular week-day session, then further downside towards 14750 can be expected.

On the other the February contract may find difficulty in holding above 15750-15850 this week. · In another development, sources from the Rubber Board have pointed out that a firm idea about the expansion of area under rubber would evolve by April this year. There are expectations of fresh planting to begin by July-August as per Rubber Board officials.   

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. In context to the latest outlook by the inter-governmental organization of 13 rubber-producing countries, India’s rubber consumption outlook for 2020 has been revised upwards to 10.18 lakh tonne with the automotive sector in a recovery mode. Therefore, the overall demand-supply fundamentals of rubber indicate greater possibility of average prices to remain above last year’s in forthcoming months.

India’s natural rubber (NR) production for 2020 is expected to be lower by 5.7% from the previous year at 6.62 lakh tonne due to excess number of rainy days and the resultant loss of harvesting days, the Association of Natural Rubber Producing Countries (ANRPC) reported in the month of December. Also, the ANRPC has also estimated world’s production of natural rubber for 2020 at 12.597 million tonne, down 9 % from the previous year, after considering the climatic changes, extreme weather, and leaf diseases disrupted the production in major rubber-growing countries