NMCE Rubber continues downtrend on global cues

NMCE rubber futures continued the bearish trend on active selling for 4th consecutive session on Wednesday. On opening itself prices traded down on heavy selling pressure. TOCOM rubber futures also traded down on active selling. However, settled on slightly positive note to ¥ 507.40 per Kg. on short covering at previous losses.
Thus, taking cues from positive closing of TOCOM futures NMCE rubber prices showed small recovery but failed to sustain the gains and fell drastically. Domestic spot market also reported a fall of `700 per quintal in a single day. Thus, on cues from domestic and international market NMCE rubber futures ended on negative note.
The rubbers futures are projected to extend the bearish trend today on negative cues from domestic market. However prices are likely to resume upside on short covering taking cues from TOCOM futures. TOCOM rubber July futures are trading slightly positive at ¥ 489.40 per Kg. on short covering on lower levels. Moreover, increasing Middle East concern might weigh on prices. Thus on cues from above stated factors NMCE rubber futures are projected to trade range bound to lower today.
Factors to Watch For
The stock of natural rubber in the country till January 30, 2011, is estimated at 3,27,115 tons, according to chairman of Rubber Board of India
According to the Rubber Research Institute of Thailand, the physical price of Thai rubber dropped 0.9 percent to 195.80 baht ($6.42) a kilogram yesterday
People’s Bank of China has increased the interest rate by 50 basis which is pressurizing the rubber prices as China is the largest consumer of natural rubber
Natural-rubber inventories monitored by the Shanghai Futures Exchange is reported around at 58,058 tons, which is down by 62 % from last year’s highest inventory levels of 151,832 tons
According to the Association of Natural Rubber Producing Countries, Natural-rubber consumption in China and India may rise 9 percent to 3.6 million tons this year and 5.2 percent to 991,000 tons respectively
According to Passenger Car Association, passenger-car sales increased 16.2 percent Y/Y to 1.53 million last month
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE February contract, prices and open interest are falling while volumes are rising. It is a good indication that heavy short selling is happening in market. However, traders are exiting their positions towards the end of the day winning short positions and loosing long positions. Market might remain volatile to down in short term
Japan Futures (TOCOM)
The TOCOM active June contract, prices, volumes and open interest all are falling. If the total open interest is falling off and prices are declining, the price decline is being caused by disgruntled long position holders being forced to liquidate their positions. Technicians view this scenario as a strong position technically because the downtrend will end as all the sellers have sold their positions, creating fresh buying opportunity at lower levels.
Shanghai Futures (SHFE)
The SHFE active June contract, prices and volumes are falling while open interest is rising. It is a good indication that a sharp rally against downtrend will develop creating a sell point for downtrend.

(Source: http://www.commodityonline.com/futures-trading/technical/NMCE-Rubber-continues-downtrend-on-global-cues-22137.html)