Tokyo rubber futures slipped back on Friday as operators took profits after prices surged to a nine-year high this week, while a cautious mood spilled over from other commodity markets hurt on Thursday's attacks in London. But underlying sentiment towards rubber remained strong, backed by protracted tightness in physical rubber supply amid bad weather in Thailand, and the market could resume a rally next week, brokers said.
The benchmark December rubber contract on the Tokyo Commodity Exchange fell the daily limit of 5.0 yen per kg to 168.5, down 3.2 percent from the nine-year high of 174.1 yen marked on Thursday. At the close it was down 4.7 yen at 168.8. Spot July contract, which has no price limit, finished down 7.4 yen at 188.3. September to November futures ended limit down. "The market corrected lower before the weekend as the latest rally was too rapid," a Tokyo broker said. "I don't think the upturned is over, as bullish fundamentals remain unchanged."
All TOCOM contracts hit their lifetime highs on Thursday for a third straight day, led by bullish nearby months, as short-covering accelerated amid expectations the physical market will remain tight until around August.
Rubber supplies have been tight due to a delay in shipments from Thailand, the world's No 1 producer and exporter of natural rubber, where production has been hurt by bad weather. Rubber supplies normally fall from around February, when the "wintering" dry season starts in southern Thailand. During the season, rubber trees shed leaves and latex output declines.
Production usually returns to normal by May, but buyers are still not receiving enough shipments. Japan buys about 60 percent of its imports from Thailand. Reflecting tight availability, rubber stocks in Japan have dropped to the lowest level in four decades. Last week, the Rubber Trade Association of Japan said crude rubber stocks at private Japanese warehouses reached a record low of 10,367 tonnes as of June 20, down 2 percent from June 10 and off more than 40 percent from the start of the year.
The June 20 figure became the new low after it dropped below the 10,431 tonnes recorded in April 1963, an official at the association said. Inventory data is available starting from 1962.
The volume of TOCOM rubber traded on Friday was 32,700 lots, down from Thursday's 61,177 lots. Open interest was 77,382 lots at the end of Thursday trade, up from Wednesday's 74,238 lots.
Comments
Comments are closed.