Tokyo rubber futures rose on Wednesday due to strength in energy prices and a weaker yen, with solid technical buying emerging after gains in the last two days bolstered market sentiment. Rises in other commodities such as gold and solid demand for physical rubber, added to the upward momentum.
The key TOCOM rubber contract for February 2008 delivery was trading up 2.0 yen or 0.8 percent at 248.0 yen per kg after reaching a session peak and this week's high of 248.4 yen.
The key contract held near the seven-day moving average of 248.3 yen, while the next resistance was seen at the 50-day moving average of 250.1 yen. Strong energy prices encouraged investment funds to buy rubber as higher oil prices usually prompt a shift to natural rubber from synthetic rubber a petrochemical product.
On Tuesday, US crude oil futures ended higher, posting a record high settlement ahead of Wednesday's inventory reports even after news that Opec ministers agreed to raise its oil production beginning November 1. Singapore dealers and Chinese buyers supported TOCOM rubber, while supplies from Indonesia and Malaysia were limited.
The weather was improving in Thailand and Malaysia, but raw material prices remained high due to strong demand as traders were competing to buy in a bid to deliver orders on time. Supply in Indonesia and Malaysia was limited, as traders had to build up stocks to prepare for the long Hair Raya festive next month, marking the end of Ramazan.
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