Rubber Market Seen Trading Sideways Next Week Amid El Nino-Related Supply Concerns

By Fatin Umairah Abdul Hamid

KUALA LUMPUR, Nov 14 (Bernama) -- The Kuala Lumpur rubber market is expected to trade sideways in the week ahead as the El Nino weather phenomenon could disrupt supply in major producing countries, according to an industry association.

The Malaysian Rubber Glove Manufacturers Association (MARGMA) said Thailand is entering its peak harvesting season, which is expected to increase raw material availability.

“Meanwhile, stronger international trade activity, particularly in the United States, and rising car sales in China are offering support, although these gains are offset by concerns over tighter financial conditions and a weaker global economic outlook,” the association told Bernama.

Industry expert Denis Low said the market is expected to trade sideways as it adjusts to the current geopolitical situation, which has driven some commodities’ prices beyond expectations while weighing on others, with demand and prices likely to remain broadly stable with a slight upward bias.

“The volatility in oil and gas prices is a serious issue that can affect businesses, while the US dollar's runaway strength can be detrimental to the balance of payments,” he said.

Meanwhile, a trader said the market is expected to trade cautiously with a mixed-to-firm undertone in the near term, supported by supply-side concerns and positive trade developments.

“However, upward momentum is likely to be capped by concerns over tighter financial conditions, prolonged geopolitical uncertainties in West Asia, subdued demand prospects and unfavourable macroeconomic conditions.

“Market participants will continue to monitor movements in regional rubber futures, developments in US trade and monetary policies, trends in the automotive industry, the ringgit's performance against the US dollar, and developments in West Asia for further market direction,” the dealer said.

This week, the rubber market traded mixed in line with the performance of regional rubber futures.

On a Friday-to-Friday basis, the Malaysian Rubber Board's reference price for Standard Malaysian Rubber 20 (SMR 20) rose 59.5 sen to 1,015.0 sen per kilogramme (kg) while latex in bulk gained 6.5 sen to 775.0 sen per kg.

-- BERNAMA