SINGAPORE (Dow Jones)–Asia rubber futures settled mixed Wednesday as the
physical market continued to hold firm in Southeast Asia.

Tokyo Commodity’s Exchange’s August RSS3 rubber contract settled Y0.7 lower
at Y289.7 a kilogram with a strong yen weighing on prices. The yen touched a
two-and-and-a-half-month high against the dollar Wednesday. A stronger yen
makes rubber imports cheaper in Japan, so investors take short positions on the
Tocom.

After opening higher in a brief rebound from sharp losses the previous day,
Tocom rubber prices fell on technical selling by funds, a Tokyo-based broker
said.

The market came off lows as some players covered their short positions and
set up long positions, among them Thai shippers running tight on supply who are
looking to either take delivery or hedge via Tocom rubber futures.

However, there will likely continue to be some short-term downward pressure
on Tocom due to the firm yen, traders said.

Other macro economic factors that may influence rubber futures prices include
upcoming U.S. jobs data, any Federal Reserve hints on when it might hike
interest rates, and the ongoing debt crisis in Greece.

Tocom rebounded in the night session with the August contract settling at
Y291.3/kg.

Natural rubber futures on Shanghai Futures Exchange fell 0.8% on the lead of
Tocom to settle at CNY24,285/ton. Shanghai Jinpeng Futures’ analyst Cao Ziyi
said that there has been a wave of profit-taking following the strong rally in
recent weeks, and futures are expected to consolidate in a
CNY24,000-CNY26,000/ton range.

RSS3 rubber on Agricultural Futures Exchange of Thailand settled THB1.15
higher at THB105.5/kg in thin trade, rising on tight physical supply, but
cautious investors avoided taking positions after Tocom rubber futures fell for
two days in a row, said Chaiwat Muenmee, analyst at DS Futures in Bangkok.

The physical rubber market was mixed with some segments taking a hit from
falling rubber future prices, but prices generally continued to hold firm.
Chinese buyers remain active in the market, reflecting robust demand that
outstrips supply, even though their bids are often too low. The buyers justify
their bid levels by saying that rubber in Chinese warehouses is cheaper,
traders said.

However, traders are unruffled by the low bids. “We know they need rubber, so
there is no need to rush,” a trader in Hat Yai said.

Rubber tapping has already stopped in some regions of Thailand, as latex
yield has trickled to low levels in the midst of the wintering season.

Asian Rubber Futures
Mar 3 Change from
previous close
Tocom Aug RSS3 Y289.7/kg Dn Y0.7/kg
C-Com Aug RSS3 Y307.5/kg Unchanged
Shanghai Sep SCR5 CNY24,285/ton Dn CNY190/ton
Thai Oct RSS3 THB105.50/kg Up THB1.15/kg
Sicom Apr RSS3 326 U.S. cents/kg Up 1 U.S cent/kg
Sicom Apr TSR20 316.5 U.S. cents/kg Up 0.5 U.S. cents/kg

The following are physical prices in Asia, quoted in U.S. cents/kg, free on
board.

Grade Shipment Mar 3 Mar 2
Bids Offers Bids Offers
RSS3 Mar/Apr – 326-329 – 326-330
STR20 Mar/Apr – 326-329 – 328-331
SIR20 Apr/May – 314 – 313-315
SMR20 Apr/May – 317-320 – 318-322
USS3 Mar THB99.15-THB100.19 THB100.73-THB100.83

Source: Dow Jones

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