NMCE Rubber gains on fresh buying

NMCE rubber futures extended the gains on fresh buying at lower levels on Monday. Futures started the day on positive note on short covering. However, prices took decent corrections during the day taking cues from down TOCOM futures.
However, later in the day TOCOM August futures witnessed a good recovery on short covering at lower levels and settled at ¥470.50 per Kg. However, prevailing rainy conditions in major rubber growing region of Kerala supported the upside in prices. Domestic spot market also witnessed a moderate positive trend.
Thus on cues from spot market rubber at NMCE platform traded higher and ended up hitting 4% upper circuit.
The rubbers futures are projected to extend the gains on fresh buying on previous huge losses on Tuesday. Taking cues from positive spot market activity prices at futures might remain higher.
TOCOM rubber July futures are also trading up at ¥479.0 per Kg continuing the previous recovery. Moreover, political tensions in Libya are also easing down which might also support the prices. Thus, on cues from above stated factors rubber futures are likely to continue the recovery 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
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 rising. Market is attracting larger numbers of traders willing to open positions from the long side and hold them. Traders are more confident that prices will continue to climb in favor of a working long.
Japan Futures (TOCOM)
The TOCOM active August contract, prices and open interest are rising while volumes are falling. Market is attracting late buyers & early shorts; market is vulnerable to a sharp correction but likely that that correction will be bought creating a buy point for uptrend.
Shanghai Futures (SHFE)
The SHFE active July contract, prices, volumes and open interest all are rising. Market is attracting larger numbers of traders willing to open positions from the long side and hold them. Traders are more confident that prices will continue to climb in favor of a working long.

(Source: http://www.commodityonline.com/futures-trading/technical/NMCE-Rubber-gains-on-fresh-buying-22229.html)