NMCE rubber futures continued the bearish trend for consecutive 4th session on heavy selling pressure on Thursday. TOCOM futures market also witnessed very choppy trade on mixed sentiments prevailing in market.
Interest rate hike in China pressurized the prices on other side weakening of yen limited the losses and September futures settled at ¥457.70 per Kg. Domestic spot market also witnessed correction thus, on cues from overall market NMCE platform continued the fall and ended in red.
The rubbers futures are projected to continue the losses on selling pressure on Friday. However, TOCOM September futures are trading higher at ¥462.20 per Kg. on lower level buying.
Gains at TOCOM are expected to be limited due to Chinese interest rate hike will reduced the demand from China. Nonetheless, weakening yen might support the prices of this yen dominated commodity which may also lend some support to Indian rubber futures later in the day.
Now days spot market of Cochin is also tracking price movement in futures and witnessing a fall or `100-300 per quintal daily however, overall fundamentals related to supply are positive for prices.
Factors to Watch For
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, The physical price of Thai rubber surged 3% to 180 baht ($5.96) a kg on April 5 amid damage to plantations from floods on Thursday
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
As per data released by rubber board, the year end deficit in natural rubber in India is estimated around 1.2 lakh tons and it is expected to be increase to 2 lakh tons during 2011-12
According to the Association of Natural Rubber Producing Countries, Consumption in China, India and Malaysia, representing 48% of global usage, will increase this year
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE April contract, prices, volumes and open interest all are declining. 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 August contract, prices are rising while volumes and open interest are falling. Market is running out of traders willing to open or hold an open long/buy. Traders are liquidating both loosing short positions & closing winning long positions. A higher probability the market is set to retrace in price lower at some point forward.
Shanghai Futures (SHFE)
The SHFE active July contract, prices, 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.
Friday, April 8, 2011
NMCE Rubber plunges on selling pressure
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