NMCE Rubber continues bearish trend on Japan's Tsunami

NMCE Rubber continues bearish trend on Japan's Tsunami
WEDNESDAY, MARCH 16, 2011
NMCE rubber futures extended the losses on strong selling interest during first half on Tuesday but later on prices resumed the uptrend on fresh buying due to March contract expiry. Domestic spot market also witnessed recovery at lower levels which is supported the prices at futures.
However, rubber futures at TOCOM continued the fall and ended the day at ¥369.50 per Kg. Reduction in demand from auto companies from Japan further added to the down side. Nonetheless, Indian futures prices on fresh buying pushed the prices futures at NMCE ended in 4% upper circuit.
The rubbers futures are projected to trade slightly positive on opening on extended fresh buying on Wednesday. Recovery at domestic and international market rubber prices might support the prices. However, overall trend is still weak which might weigh on prices later in the day.
Factors to Watch For
Rubber spot market of Kochi fell below `20,000 per quintal yesterday taking cues from global rubber market sentiments
Prices are likely to continue the bearish trend as demand from Japan a major rubber importer will decline because due to power supply disruption in Japan has caused production halt by auto manufacturing companies
According to rubber board of India, Indian February Natural Rubber Output is 54,500 Tons Vs 51,500 Tons, consumption is 79,000 Tons Vs 76,350 Tons and imports are 6,831 Tons Vs 12,278 Tons
As per data released by rubber board, the year end deficit in natural rubber in India is estimated around 1.2 lakh tons and it is expected to be increase to 2 lakh tons during 2011-12
According to the Rubber Research Institute of Thailand, physical price of Thai rubber shed 1.5 percent to 189 baht ($6.18) a kilogram Monday
According to the Association of Natural Rubber Producing Countries, Consumption in China, India and Malaysia, representing 48% of global usage, will increase this year
According to China Passenger Car Association, Sales of passenger cars and minivans declined 0.4 percent from a year earlier to 880,027 last month
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE March contract, prices and volumes are rising while open interest is falling. Market has a lot of traders initiating from both sides but larger traders may be liquidating into the higher prices. The market may be vulnerable to large price swings as shorter time frame traders attempt to trade from both sides of the market but liquidating before end of- day. Often a signal of a market turns near-term or continued volatility
Japan Futures (TOCOM)
The TOCOM active August contract, prices an open interest are rising while volumes are falling. Market is attracting late buyers & early shorts; market is vulnerable to a sharp correction but likely that that correction will be bought creating a buy point for uptrend.
Shanghai Futures (SHFE)
The SHFE active July contract, prices, volumes an open interest all are rising. Market is attracting larger numbers of traders willing to open positions from the long side and hold them. Traders are more confident that prices will continue to climb in favor of a working long.