Tokyo, Shanghai Futures Hit Records; More Upside Seen

Key Tokyo and Shanghai rubber futures hit record highs on Friday (January 21) as a weaker yen against the dollar prompted speculators to boost buying, with further gains expected due to strong demand and supply shortages.
The key Tokyo Commodity Exchange rubber contract for June delivery was up 8.3 yen, or 1.8 percent, at 474.0 yen per kg as of 0230 GMT after setting a record high of 475.5 yen.
"The benchmark contract could rise further, tracking strong gains in Shanghai, as a trend for the yen's depreciation against the dollar has started to emerge," said a trader.
Japanese traders have said TOCOM futures could even hit 500 yen in the next month as the wintering season begins in producing countries and reduces output.
The most active Shanghai rubber futures contract for May delivery was changing hands at 40,305 yuan per tonne as af 0232 GMT, up from Thursday's (January 20) close of 40,130 yuan, after climbing to a historic record 40,520 yuan. Volume was 329,617 lots.
Natural rubber changed hands at another record in Asia, just a few cents away from $6 a kg, as fears of tight supply persisted and dealers covered stocks in anticipation of more purchases from tyre makers, industry sources said.
Oil prices slumped about 2 percent on Thursday (January 20) on a sell-off sparked by an unexpected rise in U.S. crude stockpiles and worries that China might tighten monetary policy to fight inflation.
The dollar hit one-week highs against the yen and was last trading around 83 yen.
Asian physical rubber prices were offered higher on Thursday (January 20) as futures prices on the Shanghai market hit a record high, with supply remaining thin from big producing countries, dealers said.
Oil and copper dropped sharply and gold slipped on Thursday (January 20) as investors worried that China will move to cool its booming economy, the engine of growth in commodity demand this decade.
Stocks fell on Thursday (January 20) as lacklustre tech and materials earnings failed to live up to heightened expectations, threatening to short-circuit a seven-week run.
General Motors Co said it is investing $540 million in its motor plant in central Mexico to build more fuel-efficient engines for the recovering North American automobile market.
(Reuters, January 21, 2011)