Rubber dips below Rs 100 on output spurt cue

Strong resistance at the level gives in after 2 months.

A sharp fall in the global rubber prices has taken its toll on the domestic prices, which today plummeted below the Rs 100-mark after a gap of two months.

Though for the last few weeks domestic prices have been dropping, the market has been ruling above the Rs 100 level, but the strong resistance at this level was broken through today.

Today, the price of benchmark grade RSS-4 touched a recent low of Rs 98.50 a kg, and both RSS-5 and ISNR-20 were quoting at Rs 97. In a single trading session, the price of RSS-4 declined by Rs 1.50 a kg and un-graded sheet rubber plunged to Rs 96.50.

According to city-based traders, the only reason for this marked shift in rubber prices is the decreasing trend in the international market. In Tocom futures today, the price of RSS-3 was quoting Rs 115 a kg "� lower by Rs 3 than Monday's closing, and the spot price of the grade in Bangkok plummeted to a new low of Rs 116.

Experts said the downtrend in the global market would continue on account of mainly two reasons: In most of the producing countries, production would be in full swing within a few weeks and it is estimated that there would be an increase in production owing to the current high prices.

In India, the main production season would start in October and a sharp increase is being expected. As a pointer to this, there had already been a marked rise in production during April-June. During the period, total production had risen to 1,68,055 tonne, up by 16,930 tonne.

Major rubber dealers said China, which is one of the biggest consumers of natural rubber, had slowed down buying for the last couple of weeks on account of the beginning of its production season.

Besides, at present, supplies of natural rubber to various global markets are on the rise, which has triggered the recent fall in prices.

The domestic prices had touched the magical Rs 100 level on May 19. The price of RSS-4 had perked up to Rs 115 on May 27 and touched its peak at Rs 118 on May 30. The domestic surge had also been in line with a steep rise in global prices. The Tocom futures too had registered a tag of Rs 130 by the end of May.

However, by mid-June, the markets had entered a bearish orbit and prices fell down to around Rs 105-107 for the later half of the month.

On July 10, the price of RSS-4 dropped to Rs 100, down by Rs 4 a kg and there had been a strong resistance at the Rs 100 level for the last one week. But the continuing steep fall in global markets has finally rubbed off the bearish sentiment on to the domestic market today.