Rubber prices rebounded on easing of demand concerns caused by Japan earthquake and closure of automobile plants and market returned back to fundamentals. Natural rubber continues to be supported by higher prices of crude oil and tight supplies in producing countries. Pepper gained this week on tight supplies but higher prices of Indian parity weakened export demand. However, export demnad would pick up if prices ease.
COMMODITY ANALYSIS
Pepper
Pepper prices continue to be well supported on lower stocks but export orders may pick up only if prices fall so as to make it competitive to other origins. Limited supplies and lower stocks continue to provide firm support for black pepper. Availability of pepper continues to be lower in Vietnam, Brazil, India output will fall by 2000 tonnes annually to 48,000 tonnes of adverse weather conditions, according to Spices Board.
India's pepper exports in April-January fell 7 percent on year to 15,700 tonnes. Presently, India and Vietnam are the major supplies of the produce.
Unseasonal rains delayed harvest affecting the yield of pepper vines and is likely slash Indian production this year, but lower stocks and lesser global output will keep prices firm. At Natioinal Commodity and Derivatives Exchange of India April contract finished up 2.89 percent at 23454 after hitting a high of 23839. Pepper May rose from Rs 22860 to Rs 23755 after hitting a high of 23900. Pepper continues to be in bullish territory although profit booking can’t be ruled out on Monday.
What is the pepper outlook for 2011, are current prices sustainable?
Chana
Chana has shown weak trends last week on rising arrivals of new crop and weaking trends in other pulses. Chana April contract in NCDEX rose marginally from 2522 to 2528 after hitting a high of 2558 while May contract fell from Rs 2584 to Rs 2573.
Production of chana has fallen from 7.48 mn tonnes a year ago to 7.37 mn tonnes, however, overall pulses production is set for a record high of 16.5 mn tonnes as against an average of 14 mn tonnes in the past few years.
Arrivals of winter-sown crops start in February and is now in full swing.
Will pulses prices weaken further on higher production for 2011 in India?
Rubber
Rubber prices have recovered from the tsunami impact and gained in the domestic market due to thin supplies. Rubber growers are holding back their produce on hopes of better prices. Tocom rubber futures are tumbled 12 percent last week as largest-ever quake created concerns about the demand for the commodity. Several automobile majors had stopped production in Japan causing concerns about demand for tyres.
Association of Natural Rubber Producing Countries (ANRPC) stated that quake hit Japan accounts for seven per cent of the global demand for natural rubber. The crisis in the automobile sector in Japan cannot have a major impact on rubber prices Meanwhile Tokyo rubber futures rebounded sharply towards weekend on supply concerns and hopes of a possible intervention by producing countries to prop up prices.
Tocom Rubber surged on Friday climbing as much as 7.2 percent to 425.5 yen a kilogram ($5,210 a ton) after Thailand, Indonesia and Malaysia, the biggest growers, said they may reduce shipments, Bloomberg reported.
Spot prices monitored by India’s Rubber Board has risen from 21,600 per 100 last week to Rs 22,200 after hitting a low of Rs 18,700 levels.
Spot rubber prices in Thailand are quoted higher at Rs 22,692 on tight supplies while SMR-20 grade at Kuala Lumpur is quoted at Rs 20,234.
The benchmark April rubber contract on India's National Multi-Commodity Exchange (NMCE) rose 12 percent higher at 23134 while May contract rose from Rs 20789 to Rs 23698. Towards weekend, NMCE futures hit higher circuit levels on fresh buying and short covering.
India's natural rubber production in February rose by 5.8 percent on year to 54,500 tonnes, according to Rubber Board, as farmers increased tapping to cash in on a price rally.
source - www.commodityonline.com
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