Asian rubber futures settled mixed Tuesday, but prices in Tokyo rose to the crucial Y250 a kilogram psychological mark following strong buying amid tight supply from all major growing regions, including Thailand and Indonesia.
A shift in investment by funds to commodities including gold, zinc, copper and rubber also supported prices, said trade participants.
Physical prices of USS3 grade raw material in the central markets of Thailand traded above THB80/kg. Some factories even offered to buy at prices above THB81 because rains have slowed down production and supply is scarce.
The Tokyo Commodity Exchange, which was closed Monday for a public holiday, opened higher and rose to Y250/kg, in line with projections made by analysts and traders, who told Dow Jones Newswires Oct. 27 the market was likely to hit Y250 soon. Prices were then hovering around Y230/kg.
Tocom futures tried to catch up with other rubber bourses, which made gains Monday and in early trading Tuesday before profit taking set in.
"Both speculators and hedgers are taking long positions (today)," said a Tokyo-based broker.
Tocom's benchmark April contract settled Y4.1 higher at Y247.5/kg, a level not seen since October last year.
Prices eased marginally during the night session, and the April contract ended at Y246.6/kg. Night session prices aren't included in intraday trading.
"Fundamentals are tight and funds are moving investments toward commodities from currencies," said a trading executive in Japan. He said both factors are supporting rubber prices.
The November contract expired at Y238/kg with 116 lots delivered.
The expiry price was Y8 higher than the previous settlement but Y7 lower than the expiry price of Y245/kg for October. The October contract expired last month with 92 lots delivered. Each lot is five metric tons.
May will be the new benchmark contract from Wednesday.
On the Agricultural Futures Exchange of Thailand, the benchmark June RSS3 contract settled THB0.25 lower at THB89.70/kg on profit taking after rising for four successive trading days.
Prices briefly did rise above THB91/kg and traders said they are likely to bounce back again due to strong fundamentals.
Like Thailand's AFET, the benchmark March contract on the Shanghai Futures Exchange also traded higher but finally settled CNY20 lower at CNY21,820/ton. China is the world's largest consumer of rubber by volume.
Asian physical rubber prices were higher as heavy rains continued to crimp supply.
"As supply is tight, importers are keen to book cargoes well in advance," said a Singapore-based trading executive.
He said tire companies purchased SIR20 grade rubber at $2,612/ton, free-on-board, for January shipment. South Korea and U.S.-based companies bought several lots of 100 tons each of Thailand's STR20 grade rubber at $2,690/ton, FOB, for December shipment, said a trader in Phuket.
(Source: http://irco.biz)
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