NMCE Rubber tumbles on short selling

NMCE rubber futures extended the bearish trend on strong selling interest for 5th consecutive session on Thursday. On opening itself prices traded down on heavy selling pressure. TOCOM rubber futures also traded down settled on negative note at ¥ 473 per Kg. on strong selling pressure.
Rising economic tension in Middle East further added to the down side. Domestic spot market further fell by `300 per quintal. Thus, on cues from domestic and international market NMCE rubber futures ended on negative note.
The rubbers futures are projected to witness volatility today on overall bearish sentiments prevailing market. However, prices are likely to show small recovery today on short covering.
TOCOM rubber July futures are trading slightly lower at ¥ 477.90 per Kg. Moreover, Middle East concern are now easing down which may support the prices to give a pull back. Thus, on cues from above stated factors rubber futures are likely to witness a recovery today however overall trend will remain weak.
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, 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.
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 are falling while volumes and open interest are rising. If prices are in a downtrend and open interest is on the rise, chartists know that new money is coming into the market, showing aggressive new short selling. This scenario will prove out a continuation of a downtrend and bearish conditions.

(Source: http://www.commodityonline.com/futures-trading/technical/NMCE-Rubber-tumbles-on-short-selling-22189.html)