Tokyo rubber futures fell to their lowest level in nearly three weeks on Thursday as funds sold contracts, but the drop was cushioned by fresh buying. The benchmark rubber contract on the Tokyo Commodity Exchange for October delivery settled at 275.0 yen ($2.29) per kg, down 5.8 yen from Wednesday's close.
It was the lowest level since April, when it hit 272.0 yen. "The market's sentiment is not good as funds sold contracts heavily," a dealer said. "But fresh buying by hedgers prevented prices from falling below the strong support level of 275 yen." TOCOM was expected to rebound on Friday, as players who had sold short would cover their positions, dealers said.
Some users were expected to buy rubber in the futures market, as supply in the physical market was still tight, they said. Physical rubber prices were lower, tracking the fall on TOCOM, and trading was thin as buyers waited for prices to fall further, traders said. "Buyers thought TOCOM would fall further and physical prices should be cheaper," one said.
Some buyers were seeking RSS3 at around $2.30 per kg for June shipment, but no deals were done, as producers were reluctant to lower their prices due to expensive raw material, traders said. Only dealers in Singapore who had rubber stocks could sell to users in Europe and the United States.
Exporters could not compete because tight supply was keeping raw material prices high, traders said. Rain had stopped in parts of Thailand, the biggest producer, and Malaysia, the third biggest, but that did not mean an immediate increase in supply to meet growing demand, especially from China, the biggest buyer, they said.
Comments
Comments are closed.