The Hindu Business Line : Rubber prices track global trends

The domestic rubber prices conquered new peaks last week. The bull run was well supported by strong fundamentals, technicals and trend-setting overseas markets.

Enquiries from the tyre sector and other manufacturing units enhanced the market activities further.

Covering groups lifted the prices taking advantage of the low availability of the raw material.

Sheet rubber RSS 4, which opened firm at Rs 86.50 a kg on Monday, closed at Rs 88.50 a kg at Kottayam on Friday and Rs 89.50 a kg at Kochi on Saturday against Rs 85.50 a kg at the previous weekend.

Most of the remaining grades, including latex, followed suit riding on externally bullish sentiments.

Meanwhile, a leading analyst told Business Line that a major portion of the transactions recorded at higher levels was not genuine consumer buying.

Moderate gains in futures

The futures market stayed in tune with the trend and registered moderate gains in all delivery contracts though the volumes were not so impressive on most of the days.

The near month May contract which ended at Rs 87.67 a kg on the previous weekend finished at Rs 89.17 on Saturday.

The far months hit the Rs 90-mark towards mid-week as traders appeared more confident about the medium term outlook of the market.

In the international scenario, strong crude oil and precious metals spread the wings over the rubber futures till Thursday but a sharp fall in the segments reversed the mood on Friday pruning the initial gains of the week.

The heavy pre-monsoon rains over the past few weeks gave fresh hopes for an increase in latex production.

But a proportionate increase in arrivals did not materialise as growers and dealers continued to hold the stocks anticipating Rs 100 per kg as the new ambitious target for sheet rubber.

Growers upbeat

The producing sector appeared more confident and optimistic about the future trend of the market. Hence, the gap between the demand and supply positions widened putting heavy pressure on the consuming sector. It is also observed that the small growers have become more and more market conscious and well informed even about the overseas trends and domestic fundamentals than the past years.

Tread cautiously

According to Rubber Board statistics, the projected production for April stood at 53,500 tonnes and consumption at 68,000 tonnes. So the market participants could be more confident about the stability and strength of the market in the near term depending on the very basics of trading.

Growers and traders are advised to be cautious at higher levels as the presence of high speculation in the market may result in wide fluctuations both in domestic and international scene.