Sunday, July 30, 2017

Week ahead, lots of risk

Crude oil prices reached a two-month high and have posted their best weekly gains this year on efforts to curb production by the OPEC. Falling U.S. crude and fuel stockpiles and Saudi Arabia's promise to cut exports in August aided sentiment in the market.

The International Monetary Fund has kept India’s growth forecast for next year unchanged at 7.7% in its latest World Economic Outlook report. While IMF projected global growth at 3.5% this year.

Against the backdrop of a decline in factory output, with inflation at a five-year low and one has to wait and see whether Reserve Bank of India (RBI) will cut at least 25 basis points in the policy interest rate or keep it unchanged, the announcement is scheduled on 2nd August. Any rate cut has to act as a catalyst for spurring economic growth and not just to aid market sentiment.

The fall in inflation is not due to prudent fiscal management but because of a slowdown in the economy. While liquidity continues to flow unabated, when valuations are stretched and geopolitical tensions are rising, it is better not to risk.

The benchmark RSS4 grade rubber closed at `.132 a kg at Kottayam, while RSS3 grade closed at `.116.34 a kg at Bangkok and Malaysian SMR20 closed at `.94.18 a kg. On National Multi Commodity Exchange August 2017, the futures closed at `.130.96 a kg, September at `.129.85 and October 2017 closed at `.127.09 a kg. Tokyo Commodity Exchange August 2017 futures series closed at ¥203 a kg, September at ¥204.1, October at ¥203.4, November at ¥204, December at ¥203.1 and the contract for delivery in January 2018 closed at ¥204.5 a kg. On Monday, most probably Tocom futures contract for delivery in January 2018 may trade in the positive range of ¥202 & ¥208 a kg.

To read Rubber4U – 1st August 2017 issue: http://rubber4u.com/Public/Abcd.pdf

For 2017-18 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf

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