Southeastern Asia produced 10.25 million metric tons of natural rubber so far this year, compared with consumption at 10.31 million metric tons according to the Singapore based International Rubber Study Group. Output in Thailand, the largest producer and exporter, is estimated to fall by 3.9 percent in the fourth quarter of 2010 according to the group. In addition, India has scaled down its production forecast this year to 844,000 tons from 879,000 estimated earlier. China has cut its 2010 output forecast to 641,000, a decline of 0.3 percent from 2009 levels, according to the group. Their consumption of natural rubber increased 10.9 percent from the first 9 months of 2009 versus the first 9 months of 2010. India's consumption increased 5.3 percent while Malaysia's consumption increased 2.4 percent during this period.

Eoin Treacy's view Tokyo rubber prices consolidated briefly in the region of the 2008 high and broke emphatically upwards last week. A sustained move below ¥325 would be required to question medium-term upside potential. The Shanghai contract broke upwards a month ago and is accelerating higher. The Singapore contract found support in the region of the prior high and 200-day MA in July and has rallied impressively since. It is now also accelerating higher. While rubber prices are becoming somewhat overextended in the short-term, the size of the underlying trading ranges suggest that the 2008 top area may offer a future area of support.

A number of rubber related shares are performing well suggesting that they will be reasonably successful in passing on higher input costs. Korean listed, Hankook Tire is currently consolidating recent powerful gains but remains in a relatively consistent medium-term uptrend. A sustained move below the 200-day MA currently near KRW27,000 would be required to question medium-term upside potential.

Pirelli remains the leader among European tyre companies and while somewhat overbought relative to the 200-day MA, a sustained move below €5.25 would be required to question medium-term upside potential. Continental has a relatively similar pattern, while Michelin remains largely rangebound.

Cooper Tire and Rubber rallied impressively from the March 2009 lows and has been ranging for more than a year in a gradual mean reversion. A sustained move below the 2200-day MA, currently near $19 would be required to delay upside potential.

The Topix Rubber Products Index remains within a two-year base formation with prices exhibiting a downward bias over the last year. A sustained move above 1240 will be required to break the 6-month progression of lower rally highs and indicate demand is returning to dominance.

The above report mentions Church & Dwight and Reckitt Benckiser as condom manufacturers but they are probably more accurately described as diversified consumer goods companies. In any case they share a similar chart pattern of consolidation above the 2008 peak which now appears to offer a floor. Sustained moves below their respective 200-day MAs would be required to delay medium-term upside potential.

Agriculture and off-road tyre manufacturer, Titan International, has perhaps the most attractive chart pattern in the sector. I last commented on this share on April 15th when it was breaking out of its base. It has since completed a first step above the base and moved into a consistent medium-term uptrend. A sustained move below $12.60 would now be required to question upside potential.