Asian rubber futures settled lower Wednesday, extending losses for a third successive day as investors scrambled to take profits and stop losses amid rising physical supplies, trade participants said.
In a role reversal, RSS3 grade sold at a discount to TSR20 grade on the Singapore Commodity Exchange.
Physical prices of USS3 raw material in the central markets of Thailand also declined, as daily market arrivals were again above 100 metric tons.
The benchmark May RSS3 contract on the Tokyo Commodity Exchange settled Y7.5 lower at Y252.9 a kilogram after reaching an intraday low of Y250.7 a kilogram.
Prices remained under pressure during the night session, with the May contract briefly falling below Y250/kg. Night session prices aren't included in intraday trading.
"The market had been overbought for several weeks, and a correction was long overdue," said a broker in Tokyo. Most traders put immediate support at Y250/kg.
"Since the market has not made any gains for several days now, many fence sitters decided to liquidate their positions," another broker said.
For past two days, prices were partly recovering intraday but selling pressure was quite strong Wednesday because the physical supply situation has clearly improved.
Natural rubber production in Songhkla and Surat Thani provinces of Thailand for November has been affected by as much as 70%-80% compared with normal levels, due to recent floods that hit the country, said Archvis Vorapanya, chief financial officer of JSP Futures, a Bangkok-based commodities brokerage.
"A field survey conducted by our company indicates that the impact was most severe from the last week of October to late November," Archvis said.
Last year, Thailand produced 183,000 metric tons natural rubber in November, the lowest for any month. It was the only month in 2008 when production fell below 200,000 tons.
Production in November this year is expected to be even lower than last year, according to rubber industry officials.
Floods have now receded and supplies have improved, but they could tighten again next month--at the start of the traditional wintering season, when leaves fall from rubber trees and yields decline, Archvis said.
The benchmark July RSS3 contract on the Agricultural Futures Exchange of Thailand settled THB3.0 lower at THB91.20 a kilogram.
The benchmark March contract on the Shanghai Futures Exchange settled CNY375 lower at CNY21,830/ton.
Asian physical prices were lower, tracking futures market declines and receding of floods inThailand. Buyers are keeping to the sidelines, as they expect further declines this week, said an exporter in Singapore.(Source: irco.biz)
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