Asian rubber futures settled lower Thursday after three successive days of gains amid profit-taking and long liquidation due to weaker crude oil, said trade participants.
The benchmark July contract on Tocom settled Y2.0 lower at Y282.9 a kilogram, near the intraday low of Y282.6/kg.
Prices continued to fall in the night session with the July contract falling further to settle at Y281.5. Night session prices aren’t included in intraday trading.
Traders said Tocom took leads from decline in Shanghai rubber futures, with many among them profit-taking and liquidating positions in the run-up to the Lunar New Year holidays.
However, they said upward momentum in rubber futures is expected to return soon due to strong demand and tight supply.
Already, some Thai exporters are taking long positions to hedge against any rise in prices after the festive season, when wintering starts, said a trader based in Tokyo.
Wintering, the seasonal dry weather, is accompanied by falling of leaves and lower yields. This may result in lower availability of natural rubber.
The demand from China’s automobile industry is also strong, and is expected to remain strong in the medium term.
The benchmark May contract on the Shanghai Futures Exchange settled CNY230 lower at CNY23,115 a metric ton after moving higher for some time during intraday trading.
The benchmark September contract on the Agricultural Futures Exchange of Thailand settled THB1.10 lower at THB101.85/kg after moving both ways in volatile trade.
Asian physical rubber prices were mostly higher, as suppliers of raw material such as USS3 and latex hold on to supplies in anticipation of further gains.
There was a large gap in the price ideas of buyers and sellers. Buyers were reluctant to accept higher prices but sellers insisted on their offers due to the high costs of raw material.
In other news, the Singapore Commodity Exchange Thursday announced it will launch the world’s first over-the-counter clearing for physical trade in natural rubber by the second quarter of 2010.
Sicom’s OTC launch is significant because it can reduce the probability of defaults when there is a large movement in prices, as had happened in 2008 when importers in China backed out of contracts due to a slump in the market.
Now the opposite is happening. As prices rose sharply during the second half of 2009, Thai rubber factories are canceling long-term export deals of 6-12 months, which are down by 50% on year, and insisting on spot pricing.
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