Rubber prices fall in KL, stable in Jakarta

Rubber prices fall in KL, stable in Jakarta

KUALA LUMPUR (Reuter): Regional competition and a lack of foreign interest drove Malaysian rubber prices to a lower close this week, traders said yesterday.

The Malaysian Rubber Exchange and Licensing Board quoted the benchmark RSS1 buyer for October at 256.50 Malaysian cents (87 U.S. cents) a kg, down one cent from Thursday. The SMR20 buyer for October was also a cent off to 257.

If compared to a week before, the RSS1 had fallen by 6.5 cents, while the SMR20 dipped by four cents.

"It's very difficult to move the trade," said a rubber trader in Kuala Lumpur yesterday.

"Also, there's a bit of competition over prices due to the weakening of the Indonesian rupiah and Thai baht along with the ringgit," he said.

Traders said rivalry from especially Indonesian rubber had driven Malaysian producers to quote the SMR20 around three Malaysian cents lower than the relative price in Indonesia.

They said prices could stay at around present levels if the ringgit weakened further next week.

At yesterday's close, trading houses were quoting the SMR CV at 287, the SMR L at 266, the SMR 5 at 270, the SMR 10 at 259, the SMR 20 at 258 and drum latex at 195.

In Jakarta, Indonesian rubber prices were generally stable in late trading yesterday with traders expecting more bearishness next week, traders said.

"For sure, we are going to experience another bearish market next week. There is no direction at all and the market desperately needs some incentives to boost sentiment," said one trader.

Traders said demand was poor in the local market, but many were comfortable selling rubber no matter how cheap the prices.

"This kind of approach seems to make sense in the wake of the fluctuation in the rupiah. Many traders expect the government to continue easing the tight money policy, at least in order to give some boost to the currency," said one trader.

Traders said Thailand's decision not to sell rubber from its stockpile failed to boost sentiment.

They also said next week's bearish local market sentiment was in line with the expectation that Japanese rubber futures would be range-bound, with traders monitoring dollar/yen rates and movements in Asian currencies for clues to direction.

Traders said a deal was done at 40.50 U.S. cents/lb fob Medan for December shipment.

Offer prices were quoted at 40.25 fob Palembang, 40.50 fob Padang and Surabaya and 40 fob Pontianak and Jambi, all for December shipment.