This entry was posted on Tuesday, August 16th, 2011 at 7:34 pm and is filed under Rubber News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
SINGAPORE (Dow Jones)–Benchmark natural rubber futures on the Tokyo Commodity Exchange will likely find support at Y360 a kilogram in the third quarter on the back of firm fundamentals, International Rubber Consortium Chief Secretary Yium Tavarolit said Tuesday.
The Bangkok-based Yium said that rainy weather in northern and northeastern Thailand is causing some concerns, as it is leading to wetter-than-usual conditions.
“Heavy rain in northern Thailand, which is causing severe flooding in many northern provinces, is likely to head towards the central and southern Regions of country in the coming months,” the economist wrote in his weekly research note.
Investors will likely be bargain hunting on Tocom at the Y360/kg level, he said, noting that prices are holding up well–despite the strong yen and recent market turmoil.
Benchmark January Tocom rubber settled at Y363.8/kg Tuesday, down Y1 from Monday”s settlement and around 7% off early August benchmark levels around Y390/kg.
Southern Thailand was hit by floods last year during wetter-than-usual conditions, causing supply disruptions that contributed to a prolonged natural rubber price rally. The area is set to enter the wet season again next month.
Yium said that despite price volatility recently, prices are at acceptable levels for both producers and consumers. He added that price levels should stay around the $4.50-$5/kg level this year. Spot rubber is being offered well above $4.50/kg–down sharply from record levels well above $6/kg in February, when benchmark Tocom rubber was trading above Y500/kg.
Yium added that Chinese demand is supporting spot prices in the country as buyers replenish inventories–which in turn is supporting futures prices on the Shanghai Futures Exchange.
Source: Dow Jones