Asian rubber futures rose above Y275 a kilogram Thursday to a new 15-month high on speculative buying amid spillover support from higher crude oil and a weaker yen, said trade participants.
They said the gains were speculative and in anticipation of fresh demand as physical supplies have increased in Thailand, the world's largest producer and exporter of natural rubber.
The benchmark Tocom June RSS3 contract settled Y5.1 higher at Y274.9/kg after reaching an intraday high of Y275.7, a level not seen since September 2008.
Prices rose further during the night session, and the June contract ended at Y276/kg. Night session prices aren't included in intraday trading.
Traders put the next level of resistance at Y280/kg, then Y286.5/kg, which is another high that was last reached in September 2008.
"Speculators are setting up more long positions but may take some profits again before the end of the year," said a broker in Tokyo.
The market resumed trading after yesterday's holiday amid expected short selling, but gains in other commodities buoyed market sentiment.
Rolling over of contracts by funds is yet to pick up momentum, but a few hundred lots moved to June from the May contract by funds, said another broker in Tokyo.
Nymex light, sweet crude for February delivery traded above $77 a barrel during Asian trading hours, providing strong support for rubber prices.
The benchmark March contract on the Shanghai Futures Exchange settled 1.7% higher at CNY23,340/ton after hitting a new 2009 high of CNY23,505/ton.
The benchmark July RSS3 contract on Agricultural Futures Exchange of Thailand settled THB2.70 higher at THB96.15/kg after reaching an intraday high of THB96.35. Most brokers put immediate support at THB96.
"Physical supplies are ample, but prices have risen because of gains in China and Japan," said Chiaki Furui, chief executive of Agrow Enterprise, a Bangkok-based commodities brokerage.
Total availability in three central markets of Thailand has been above 150 tons on most days for the past week due to less rains. A high pressure system is likely to weaken until Saturday, the Thai Meteorological Department said in its latest forecast.
"There are concerns that rains may revive (after a lull), but the current dry weather is good for rubber production," said Archvis Vorapanya, chief financial officer of JSP Futures, a Bangkok-based commodities brokerage.
He said current physical RSS3 rubber prices around THB95/kg are also attractive and are encouraging planters to produce more rubber.
According to industry estimates, natural rubber production in Thailand is likely to have fallen below 175,000 metric tons in November due to floods but is likely to be above 200,000 tons in December as rainfall receded this month.
Traders said Thailand is currently in the peak production season, and if the weather is conducive, supplies should be ample for the next two months before wintering slows down output.
Asian physical prices were higher, tracking gains in futures markets, but buying was limited, traders said.
"Many traders are away on holidays, and this has slowed down trading," said an exporter in Singapore.
He said higher prices have also been damping buying sentiment.
"Due to higher prices, we haven't been able to make any sales of RSS3 this week," said an executive at a Thai rubber manufacturing company.
Thai latex concentrate traded at $1,800/ton, CIF, for shipment to Malaysia by mid-January, said a Kuala Lumpur-based importer.
(Source: irco.biz)
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