NMCE Rubber continues uptrend on active buying

NMCE Rubber continues uptrend on active buying
FRIDAY, MARCH 4, 2011

NMCE rubber futures continued the bullish trend on 3rd consecutive session on active buying interest Thursday. On opening itself prices started trading higher on strong buying interest.
Domestic spot market also witnessed good recovery in prices amid limited supply. TOCOM futures also traded higher on fresh buying at lower levels and but settled at slightly lower note shading the gains made in morning.
TOCOM August closed at ¥470.60 per Kg. Prevailing rainy conditions in major rubber growing region of Kerala also supported the upside in prices. However, prices took small corrections during the day but overall buying interest pushed the prices up and futures ended the day on higher note.
The rubbers futures are projected to continue the positive trend on extended fresh buying on Friday. Taking cues from positive spot market activity prices at futures might remain higher.
Rains in major growing region of Kerala might support the prices. However, TOCOM rubber August futures are trading down today at ¥466.80 per Kg. Thus, on cues from negative international market prices might take sharp corrections on profit booking during the day.
Factors to Watch For
The stock of natural rubber in the country till January 30, 2011, is estimated at 3,27,115 tons, according to chairman of Rubber Board of India
Natural-rubber inventories monitored by the Shanghai Futures Exchange is reported around at 58,058 tons, which is down by 62 % from last year’s highest inventory levels of 151,832 tons
According to the Association of Natural Rubber Producing Countries, Natural-rubber consumption in China and India may rise 9 percent to 3.6 million tons this year and 5.2 percent to 991,000 tons respectively
According to Passenger Car Association, passenger-car sales increased 16.2 percent Y/Y to 1.53 million last month
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE February 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 and volumes are falling while open interest is rising. It is a good indication that a sharp rally against downtrend will develop creating a sell point for downtrend.
Shanghai Futures (SHFE)
The SHFE active July contract, prices are rising while open interest and volumes are decreasing. Market is running out of traders willing to open or hold an open long/buy. Traders are liquidating both loosing short positions & closing winning long positions. A higher probability the market is set to retrace in price lower at some point forward.



TOCOM Rubber Seen At 497.5 Yen/Kg By End-March
FRIDAY, MARCH 4, 2011

Tokyo rubber futures are likely to move higher this month because of seasonally tight supply and strong demand from the tyre industry, but prices won't hit the record highs seen in mid-February and may slip back in April.
A Reuters poll this week forecast the benchmark rubber contract on the Tokyo Commodity Exchange, currently August, would be at 497.5 yen ($0.608) per kg at the end of March.
That is 6.7 percent higher than the actual closing price of 466.4 yen at the end of February. It traded at around 475 yen on Thursday (Mar 3).
"TOCOM prices are likely to be supported by demand for cars spreading from big cities in China, while rubber-producing countries are in the dry season," said Hiroyuki Kikukawa of Nihon Unicom.
Car makers have been relying heavily on growth in emerging markets such as China, Brazil and India, but a rebound in sales in Europe and the United States has raised hopes that a recovery in the global economy may be sustainable.
The median forecast of 497.5 yen for the end of March was well below the record high of 535.7 yen per kg set in mid-February.
"Prices have risen too fast to a level that players think are not realistic and where the market is over bought," said a Malaysian trader.
Traders said they expected a period of correction, with both funds and operators in the rubber sector taking profits.
"I think they could take profits and stay away from the market for a while as it is too risky, because prices are very volatile," said a trader at Thailand's Hat Yai rubber centre.
Given that possibility, dealers and analysts forecast the benchmark contract could dip slightly to 485.0 yen per kg by the end of April.
"Prices could face a corrective phase, but they should still be supported by limited supply," an Indonesian trader said.
Thailand, Indonesia and Malaysia, the world's top three rubber producers, are in the dry season, when rubber trees stop producing latex, forcing farmers to halt tapping.
Physical rubber prices also surged to a record high in mid-February at $6.40 per kg and were expected to remain at firm levels until the dry season ends, normally by end-April.
Thai RSS3 was forecast to be at $6.15 per kg at the end of March, up from $6.00 at the end of February.
Malaysian SMR20 and Indonesian SIR20 were forecast to be at $5.63 and $5.46 per kg respectively at the end of March, up from around $5.39 at the end of February.
(Reuters, March 3, 2011).




Malaysia to set rubber prices
FRIDAY, MARCH 4, 2011

The Malaysian government will hold talks with other key rubber producers Indonesia and Thailand to ensure prices of the commodity don’t fall too rapidly, Deputy Plantation Industries & Commodities Minister Hamzah Zainuddin told reporters in Kuala Lumpur today.
“We want to see prices of rubber stable at one range,” Hamzah said. “Prices of rubber should be around RM12 to RM15 per kilogram and it’s enough for everyone to make money.” – Bloomberg.



The Rubber Market Remains Choppy
FRIDAY, MARCH 4, 2011

Investors liquidated their long positions for profit-taking on Tokyo and Shanghai rubber futures in the wake of persistently various bearish market sentiments that pulled down cash prices across the board on 28 February.
The two rubber futures rebounded on the following day due mainly to a rally on Wall Street, stabilizing oil prices and a weaker Japanese yen against the greenback, but rubber futures in Thailand (AFET) and cash prices in the region continued falling further as most buyers stayed on the sidelines.
On 2 March, Tokyo and Shanghai rubber futures and cash prices in the region retreated again except for rubber futures and cash prices in Thailand after crude oil futures on New York Mercantile Exchange breached a US$100 level and settled at US$102.23 per barrel.
Concern over rising oil prices amid unsettled uprisings in the Middle-East and North Africa still casts a cloud over the global economy because costs of production and services and inflation are rising everywhere in the world. Consequently, the global economy could return to the brink of stagnation if oil prices continue rising further.



Spot rubber improves on short covering
FRIDAY, MARCH 4, 2011

KOTTAYAM, MAR. 3:
Physical rubber prices continued to strengthen on Thursday. The market moved in tandem with the domestic futures on the National Multi Commodity Exchange (NMCE). Meanwhile, latex 60 per cent fell further amidst low demand.
According to traders, sheet rubber improved to Rs 229.50 (227) a kg on fresh buying and short covering. The grade firmed up to Rs 230 (226) a kg both at Kottayam and Kochi, as reported by the Rubber Board.
FUTURES RISE
In futures, the March series concluded at Rs 229.35 (225.22), April at Rs 238 (235.01), May at Rs 243 (239.15), June at Rs 245.30 (241.57) and July at Rs 245.50 (241.20) a kg for RSS 4 on the NMCE.
The volumes totalled 19558 lots and open interest 10967 lots. The turnover was Rs 462.60 crore.
RSS 3 (spot) slipped to Rs 274.34 (274.71) a kg at Bangkok. The March futures for the grade increased to ¥512 (Rs 282.05) from ¥506 during the day session but then declined to ¥502 (Rs 276.54) a kg in the night session on the Tokyo Commodity Exchange (TOCOM).
Spot rates were (Rs/kg): RSS-4: 229.50 (227); RSS-5: 228 (224); ungraded: 225 (221); ISNR 20: 227 (224) and latex 60 per cent: 138 (140).



Natural rubber prices rise by Rs 4 to Rs 230 per kg
FRIDAY, MARCH 4, 2011

New Delhi, Mar 3 (PTI) Natural rubber (NR) prices today surged by Rs 4 in the domestic market to Rs 230 per kg.
Prices of NR in the domestic markets at Kottayam were at Rs 226 per kg yesterday, according to the Rubber Board data.
The rate of NR in the international physical market at Bangkok dipped marginally today to Rs 274.34 per kg as against Rs 274.71 per kg yesterday.
NR prices had snapped its week-long losing streak on March 1 by rising Rs 3 to Rs 224 per kg in the domestic markets.
Experts attributed the rise in prices to volatility in the international and domestic futures markets, amid tight supplies in the physical markets.