BANGKOK, July 6 (Reuters) – Tokyo rubber futures were
forecast to slip lower in July, weighed down by increasing
supply in major producing countries and uncertainty over
Japan’s economic recovery, but still supported by overall steady
demand from major tyremakers, a Reuters poll showed on
Wednesday.
The benchmark sixth-month rubber contract on the Tokyo
Commodity Exchange, currently December 2011 , will be
355.0 yen per kg by the end of July, according to a median
forecast from 10 analysts and dealers polled by Reuters.
That was 2.7 percent lower than an actual closing price of
365.0 yen per kg at the end of June and was well below a
forecast of 392.5 yen in a similar poll made in early June.
“Prices should go in a downward trend as there should be no
concerns about supply anymore,” said a Tokyo-based trader.
Heavy rain in Thailand, the world’s biggest producer and
exporter, has stopped, allowing farmers to tap more latex,
traders said.
“Supply should get back to normal by mid-July,” said a
trader in Thailand’s Hat Yai rubber centre, referring to
Thailand’s monthly production of around 300,000 tonnes.
Besides rising supply, traders said there were still
concerns over a recovery of Japan’s auto industry in the second
half of this year that weighed on the market.
New vehicle sales in Japan slumped by more than a fifth in
June as the production disruption from the March earthquake
lingered. [ID:nL3E7I10AR]
Benchmark TOCOM rubber was forecast to drop slightly lower
to 350 yen per kg by end-August as supply is seen rising
further, dealers said.
“TOCOM will be weak in July and could fall even lower in
August as the weather should be fine and supply should rise
further,” said another Japanese dealer.
Global natural rubber production was forecast at 9.96
million tonnes in 2011, slightly higher than a previous estimate
of 9.94 million tonnes on an upward output revision by the
second-largest producer, Indonesia, according to the Association
of Natural Rubber Producing Countries (ANRPC). [ID:nL3E7HT08D]
With rising supply, the benchmark Thai smoked rubber sheet
(RSS3) was forecast to drop to $4.45 per kg by end-July, down
from $4.65 per kg at the end of June.
However, physical rubber prices were unlikely to fall
sharply as traders said overall steady demand from major
tyremakers still supported prices and prevented them from
falling significantly despite rising supply.
Global demand for rubber, both natural and synthetic, is
forecast to rise to 25.7 million tonnes in 2011, slightly down
from an earlier estimate of 26.1 million tonnes, according to
the International Rubber Study Group (IRSG).
“Yes, supply is rising. But there are still buyers in the
market who continue to buy to replenish their falling stocks,”
said Malaysian trader.
Japan’s crude rubber inventories fell 8 percent in the
period from June 10 to June 20, reflecting tighter supplies
during the past few months when heavy rains hit producing
countries, according to the Rubber Trade Association of Japan.
[ID:nL3E7I40SF]

Forecasts for TOCOM sixth-month prices in yen per kg:
end-July end-August
Median 355 350
Lowest 300 300
Highest 400 400
1. Unattributable 330 350
2. Unattributable 300 300-320
3. Unattributable 355 350
4. C.V. Dramaga 335-365 350-380
5. Unattributable 355 350
6. Yong’an Futures 400 400
7. Supara Rubber 360 360
8. A.T.S. Rubber 370-380 375-380
9. Unattributable 350 330
10. Unattributable 360 320

Forecasts for Thai RSS3 in U.S. dollar per kg:
end-July end-August
Median 4.45 4.21
Lowest 4.30 4.00
Highest 4.80 4.80
1. Unattributable 4.45 4.42
2. C.V. Dramaga 4.30-4.50 4.50-4.70
3. Unattributable 4.45 4.00
4. A.T.S. Rubber 4.60-4.80 4.60-4.80
5. Unattributable 4.50 4.00
6. Unattributable 4.30 4.00

Source: Reuters

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