Rubber losing all the initial gains

The Federal Reserve's signal that the era of cheap central bank money was coming to an end. Plans by the U.S central bank to scale back its money printing combined with fears that China's policy may be tightening to lift the dollar has raised fears of prolonged market shakeout, while commodities extended last week's losses.

Rubber declined, heading for a fifth monthly loss, amid concern that demand may weaken from the world’s largest consumer. Rubber grade RSS4 trading flat in the local market and in the spot market on NMCE, the grade was little changed as investors await fresh triggers for further directional moves. TOCOM rubber futures erased all the initial gains while SHFE and AFET rubber futures dropped. In May, natural rubber production in India rose 1.7% to 59000 tonnes, while consumption dropped 3.1% to 83000 tonnes. Imports slumped 17% to 17334 tonnes.

The Indian rupee hit an all-time low against the US dollar and it is going to impact the industries and the common man very badly. Crude oil accounts for a major share of India's import bill, which will become more costly, due to falling rupee. The additional burden of importing crude oil will be transferred to the consumers and in turn transportation charges will increase. Manufacturers would also revise their prices upwards to match their profit margins.

Rubber futures in Tokyo swung between gains and losses as Japan’s currency weakened against the dollar on prospects the Federal Reserve will signal the fate of U.S monetary stimulus. The contract for delivery in November on the Tokyo Commodity Exchange was down at ¥231.6 a kg.  RSS3 grade closed at `.163.89 a kg at Bangkok, while Malaysian SMR20 closed at `.133.18 a kg. Indian RSS4 grade rubber closed at `.175.50 a kg at Kottayam, while on the National Multi Commodity Exchange July futures were trading at `.173.15, August at `.169, September at `.165.19, October at `.162.06 and November at `.166.38 a kg., at 3.30 pm IST.

Oil in New York traded nears a nine-month high after an industry report showed U.S stockpiles dropped. Higher oil prices boost the cost of making synthetic rubber.