Tokyo rubber futures ended higher on Tuesday as bargain hunters bought on dips after prices fell in early trade due to a firmer yen. The benchmark rubber contract on Tokyo Commodity Exchange for July delivery settled at 277.9 yen ($2.31) per kg, up 2.3 yen from Monday's close.
It fell as low as 272.3 yen in the morning session, when the stronger Japanese yen encouraged selling. A stronger yen against the dollar makes yen-denominated commodities cheaper in the dollar-billed export market, which normally leads to lower Tocom prices.
However, prices headed up in the afternoon to the intraday high of 278.7 yen as speculators bought back contracts, expecting to cash in profit later, dealers said.
"Players buy on dips as they believe that prices won't fall sharply," one said. "Fundamentals still supported Tocom prices," a dealer in Tokyo said. "What happened today is just a correction." Tocom prices were expected to rebound over the next few days, backed by supply concerns, to challenge key resistances at 280 and 290 yen, dealers said.
However, some pessimistic dealers said another correction would take place when prices rose above 280 yen. "Although I expect a new correction, I don't think prices would fall below 260 yen as fundamentals still support," one said.
Physical prices mostly slipped after Tocom prices dipped in early trade. Trade was thin as floods in Indonesia, the world's number-two rubber producer, disrupted communications and transportation, traders said.
The floods have displaced 340,000 people and killed nearly 30. Water in parts of Jakarta, a city of nine million people, has been up to 4 metres (13 feet) deep, causing blackouts, cutting telephone lines and blocking key roads.
Offers for several rubber grades were expected to remain firm over the next few weeks with prices rising as Thailand, the world's number-one rubber producer, is in the wintering dry season, when trees produce less latex. The dry season is expected to last until March.
Comments
Comments are closed.