By Lewa Pardomuan
SINGAPORE, May 27 (Reuters) – Benchmark Tokyo rubber futures could trade in a tight range this week on worries over a slowing Chinese economy, dealers said on Monday.
Among other soft commodities, robustas from Vietnam and Indonesia could retain high premiums to London futures, while cocoa butter ratios may slip as chocolate makers refrain from purchases, waiting for better prices.
The most active rubber contract on the Tokyo Commodity Exchange, currently October, hit a low of 264.1 yen a kg, its weakest since May 7, on demand concerns, and as the Nikkei fell more than 3 percent on a rebound in the yen.
“TOCOM rubber is likely to be depressed this week, mainly after the Chinese PMI data. The range I am looking at for rubber for this week is 255 to 260 yen,” said Lee Chen Hoay, investment analyst at Phillip Futures in Singapore.
“The inventory in China is also something we need to watch,” he added, referring to rubber stocks in Shanghai that are holding near their highest level since 2010 (SNR-TOTAL-DW).
Factory activity in China, the world’s largest rubber consumer, fell in May for the first time in seven months, underscoring fears its economic recovery has stalled and that a sharper cooling may be imminent.
Investors also fret about the possibility of the U.S. Federal Reserve dialling down its stimulus programme after data on Friday showed orders for US-made durable goods rose more than expected in April.
“If this happens, the U.S. dollar is likely to strengthen, and commodities as a whole will be impacted negatively,” said Lee at Phillip Futures.
Source: Reuters
