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Thursday, August 11, 2022

Asia Softs-Tokyo rubber may try to rally; glut hits sugar

By Rajendra Jadhav

MUMBAI, Oct 13 (Reuters) – Tokyo rubber futures may edge up from recent five-year lows this week as China could be raising imports, although a further fall in crude oil prices would limit any gains in the global rubber benchmark, dealers said on Monday.

Among other soft commodities, Vietnamese robusta prices are likely to trim their discount to London prices, but Thai raw sugar discounts could remain steady to New York futures as mills are eager to cut stock before the new season starts next month. Cocoa butter could edge higher due to tight supplies.

Japanese markets were closed for a public holiday on Monday. On Friday, the most active rubber contract on the Tokyo Commodity Exchange closed 3.6 yen lower at 178.7 yen($1.6545) per kg, after plunging earlier this month to 173.8 yen, the lowest in more than five years.

“Tokyo futures could rise marginally this week due to Chinese demand and producers’ attempts to prop up prices,” said a dealer based at Kochi in the southern Indian state of Kerala.

Rubber trade associations in Thailand, Indonesia, Malaysia, Vietnam and Cambodia decided on Friday to urge their members not to sell rubber below current prices, according to a statement posted by the International Rubber Consortium on its website.

However, the continuing weakness of crude oil remains bearish for rubber, dealers said. Natural rubber and crude oil, a base product to make synthetic rubber, normally rise and fall in tandem.

Brent crude oil fell below $88 a barrel on Monday, hitting its lowest in almost four years, after key Middle East producers signalled they would keep output high to defend market share, even if that meant lower prices.

In the sugar market, Thai dealers were offering high polarisation raw sugar at discounts to New York futures as mills wanted to trim inventory before the new season.

“Both Brazil and Thailand want to raise their shipments, but demand is subdued,” said a Singapore-based dealer.

ICE raw sugar fell for the third straight session on Friday, with the March contract settling down 0.9 percent at 16.55 cents a lb, continuing a round of profit-taking that began on Thursday after prices hit a two-month high of 17.20 cents a lb. (Reporting by Rajendra Jadhav; Editing by Alan Raybould)

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