Fluctuations in currencies and crude oil prices have caused natural rubber (NR) prices across key physical markets to suffer further losses from the last week of May 2017 despite a deficit in world supply, says Association of natural rubber producing countries (ANRPC)
Based on preliminary estimates, world supply during January to May 2017 was nearly 600,000 tonnes in deficit and the shortfall is anticipated to widen to around 700,000 tonnes by the end of June 2017, says the latest statistical report of ANRPC. World supply during 2017 is anticipated at 12.756 million tonnes, slightly lower than 12.771 million tonnes anticipated a month ago, the report says adding that response of farmers to the prevailing downtrend in NR market is likely to bring the supply further down.
Physical prices of NR are increasingly dominated by sentiments in Shanghai and TOCOM futures which are vulnerable to fluctuations in currencies, crude oil prices and geo-political developments, says Dr. Nguyen Ngoc Bich, Secretary-General, ANRPC in his introduction to the latest report and adds “ Analysis reveals that the prevailing bearish trends in NR prices are largely due to unexpected fall in crude oil prices and sharp appreciation in Chinese yuan and Japanese yen”
Speculative investors’ expectation of an upward revision in US policy interest rates in June stands as another major constraint for recovery in Asian commodities including NR. These observations point to the increasing vulnerability of natural rubber prices to factors external to its demand and supply, he points out.