NMCE Rubber continues downtrend on China’s inflation fears

NMCE rubber futures continued the bearish trend for 6th consecutive session on Tuesday. News of Chinese interest rate hike in coming month weigh on sentiments and TOCOM futures market extended the bearish trend and September futures settled at ¥408.20 per Kg.
Domestic spot market also continued the fall as buyers are staying away from market on expectations of further fall in prices. Therefore, taking cues from domestic spot and international market futures ended the day on negative note.
The rubbers futures are projected to continue the bearish trend on strong selling interest on Wednesday. However, TOCOM September futures are trading up at ¥423.00 per Kg. on short covering at earlier losses.
Nonetheless, concern on demand may decline from US as they have cut government spending which is likely to weigh on prices. Thus, in Indian market overall trend is likely to be downside biased however; recovery on short covering can not be over ruled.
Factors to Watch For
According to Bloomberg sources, China’s is likely to increase the interest rate for 5th time on rising concern of inflation
Decision of reduction in government spending by Us is also pressurizing the prices as demand for commodity used in auto industry is likely to decline
According to Department of Disaster Prevention & Mitigation, around 19,641 acres of rubber plantations have been damaged in Thailand due to heavy flood
According to the Rubber Research Institute of Thailand, The physical price of Thai rubber dropped to 177.3 baht ($5.89) a kilogram yesterday
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE May contract, prices and open interest are falling while volumes are rising. Market is running out of traders willing to open or hold a Buy/ Long. Traders are liquidating both loosing long positions & closing winning short positions. A higher probability the market is set to retrace in price lower at some point forward.
Japan Futures (TOCOM)
The TOCOM active September contract, volumes are falling while prices and open interest are rising. 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 August 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.
Courtesy: Karvy Commtrade Ltd.

(Source: http://www.commodityonline.com/futures-trading/technical/NMCE-Rubber-continues-downtrend-on-China%E2%80%99s-inflation-fears-23293.html)