Rubber Positions in Tokyo Checked for Manipulation

Rubber Positions in Tokyo Checked for Manipulation

April 22 (Bloomberg) -- The Tokyo Commodity Exchange, which provides the benchmark price for natural rubber, is checking futures positions held by its members after the volatility of prices jumped.

“We have checked with every commodity brokerage company about how many long positions they hold in contracts for delivery in April, May and June,” Kazunari Hayakawa, executive managing officer for the exchange, said today by phone. “We need to check whether any price manipulation is occurring.”

September-delivery rubber, the most-active futures contract in the exchange, fell as much as 4.3 percent today after surging by 4 percent in the previous two days.

The April-delivery rubber jumped by as much as 2.3 percent yesterday to 450 yen per kilogram ($4,851 a metric ton), the highest-ever price for a nearby contract. The contract hadn’t traded by 11:28 a.m. Tokyo time and will expire tomorrow.

The contract surged 35 percent this month as supply from Thailand, the world’s largest producer and exporter, decreased seasonally as the nation is in a low-production period from February to April.

Speculators with short, or sell, positions in April- delivery rubber must buy back the contract by April 23 otherwise the raw material will be delivered.

Mixed trend in rubber

Kottayam, April 21

Spot rubber prices witnessed a mixed trend on Wednesday. The market opened better with sheet rubber quoting up to Rs 170 a kg but surrendered the gains partially on late trades following the declines in its futures on National Multi Commodity Exchange. The grade concluded the session at Rs 169 (168.50) a kg, recording marginal gains though there was no fresh buying from major consuming industries.

Futures slip

The May futures slipped to Rs 167.05 (170.57), June to Rs 170.41 (173.80), July to Rs 170.10 (173.54) and August to Rs 166.75 (170.34) a kg for RSS 4 on National Multi Commodity Exchange. The April futures for RSS 3 improved to ¥441.5 (¥440) (Rs 211.40), May to ¥386.8 (¥375.6), June to ¥363.5 (¥357.3), July to ¥344.1 (¥341.4), August to ¥332.3 (¥329.3) a kg during the day session on Tokyo Commodity Exchange. RSS 3 flared up sharply to Rs 177.63 (171.84) a kg at Bangkok. The grade improved to Rs 182.53 (181.14) a kg on Singapore Commodity Exchange (SICOM).

Spot prices were (Rs/kg): RSS-4: 169 (168.50); RSS-5: 167 (166); ungraded: 164 (164); ISNR 20: 162 (161.50) and latex 60 per cent: 106 (106).

Rubber turns out to be a better investment than gold, silver
Prices to stay firm on tight demand-supply gap.


Ahmedabad, April 18

Very few investors would have ever imagined that an agricultural crop like rubber could give them better returns than gold, silver, Nifty or Sensex. But this has actually happened over the last one year.

The trend, according to an official of National Multi-CommodityExchange (NMCE) here, shows that rubber has emerged as the best bet for the investors for getting the highest returns on their investments when compared to major asset classes.

As on March 31, 2010, if gold and silver gave return of 7.19 per cent and 22.6 per cent on investment respectively, rubber produced an unprecedented return of 86.74 per cent.

Even Sensex and Nifty gave returns of 77.01 per cent and 71.54 per cent respectively.

In fact, over a first three-month period, gold and Sensex gave negative returns of 1.91 per cent and 0.18 per cent respectively.

Tightly balanced market

Currently the rubber market is very tightly balanced globally as well as in India. And when there is a tightly balanced demand and supply situation, even a small change in either demand or supply will have a disproportionately large impact on prices. That is exactly what is happening now.

Positive signals

Global growth signals are very positive in the largest consuming country like China, where the auto sector sales are booming.

India also is having huge upsurge in rubber demand, thanks to earlier import inventories.

Otherwise, the situation would have been more alarming, the official said.

While there is a huge, increasing demand for rubber, the supply has not kept pace with it. Also, the imports are very expensive due to high international rubber prices and 20 per cent import duty on rubber.Therefore, the rubber prices will remain firm for some time.