“The recent uptrend in the natural rubber furtures may be attributed to the depreciation of the Japanese Yen. The futures in NMCE may not go above 175 levels at least in a span of one month,” the trader noted.
A seasoned natural rubber trader from Kerala has observed that if the TOCOM futures drop by at least 10 Yens, the futures on the NMCE too may drop substantially, erasing all the gains. Now, if the TOCOM futures manage to climb 2 Yens or more, then chances galore that the futures here may rally.
“The recent uptrend in the natural rubber furtures may be attributed to the depreciation of the Japanese Yen. The futures in NMCE may not go above 175 levels at least in a span of one month,” the trader noted.
The downtrend in Yen began when the Japanese government announced record Quantitative Easing measures in April that would see money supply to the tune of $1.4 trillion injected to the economy in multiple stages.
This move has resulted a downfall in Yen. Morning saw Yen charting new lows against the US Dollar and resultant uptrend in natural rubber futures.
As of 17.35 JST, October contract of natural rubber was seen trading at 294 Yens a kilogram against the previous close, a loss of 3.8 Yens.
On India’s NMCE, the futures for delivery on May was seen trading at 16930 a quintal as of 02.26 PM IST. It touched a high of 17090 and a low of 16920 in the intra-day session.
“Rubber futures are the biggest beneficiary from a weakening yen against the dollar among commodities,” said Kazuhiko Saito, chief analyst at broker Fujitomi Co. in Tokyo to Bloomberg
“Its physical prices, denominated in Thai baht, remain firm,” he noted.
The demand from China is yet another factor that has pushed the futures up and cannot be ignored. The nation was intend on stockpiling as much as 200,000 tons of rubber through 2013, including 60,000 tons by the end of 2012 at about $4,000 a ton.
The volumes are double than that of previous buying.
“(Shanghai) Futures had been oversold because of concerns about recession in Europe and slowdown in China’s economic growth,” Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo, said by phone to Bloomberg.
“China is actually expanding rubber imports to build up stockpiles, buoying cash prices, while futures in Tokyo got an extra boost from the currency market,” he noted.
Source: commodityonline.com
