NMCE Rubber drops on profit selling

NMCE rubber futures extended the losses on active selling on Tuesday. However, TOCOM futures market also traded down on profit selling at higher level and September futures settled at ¥461.50 per Kg.
Another earth quake in Japan weighed on market sentiments. Fall in oil prices and strengthening of yen against dollar also added to the downside. Domestic spot market activity remained subdued on sluggish demand.
Therefore, taking cues from overall market trend prices at NMCE platform remain lower and ended the day on negative note.
The rubbers futures are projected to continue the losses on strong selling interest initially on Wednesday. TOCOM September futures are also trading down at ¥442.0 per Kg. on lower level buying.
The yen rose against all of its major peer currency on demand for safer assets after an earthquake hit Japan.
Thus, rising yen is acting as a limiting factor for rubber prices. However, limited supply from Thailand due to New Year holiday might limit the losses. Therefore we expect rubber prices to trade volatile today showing smart recovery later in the day.
Factors to Watch For
Thai market will be closed from April 13 to 15th due to Thai New year. Therefore supply might remain tight in world rubber market
According to Bloomberg sources, China’s natural-rubber imports were 210,000 tons in March, compared with 110,000 tons in February and 190,000 tons in March2010
Floods in Thailand, world’s largest exporter have impacted the supply of commodity used in tyres and rising crude oil prices are also supporting the rubber prices
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, physical price of Thai rubber was unchanged at 184.8 baht ($6.15) a kg yesterday
As per deputy head of the China Rubber Industry Association, Natural-rubber demand in China, the biggest consumer, will rise 8% this year. Consumption will be 3.24 million metric tons, while tire output will climb 7.9 percent to an all-time high of 453 million units
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE May 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.
Japan Futures (TOCOM)
The TOCOM active August 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.
Shanghai Futures (SHFE)
The SHFE active July 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 a bearish condition.
Courtesy: Karvy Commtrade Ltd.

(Source: http://www.commodityonline.com/futures-trading/technical/NMCE-Rubber-drops-on-profit-selling-23190.html)