Rubber to continue downtrend on short selling

NMCE rubber futures continued the bearish trend on selling pressure on Wednesday. TOCOM futures market also traded down on active selling on Thursday and September futures settled at ¥442.10 per Kg. Fall in oil prices also added to the downside.
However, domestic spot market activity was mixed with no loss. Therefore, taking cues from spot market prices at NMCE platform showed recovery towards closing and futures ended the day on slightly positive note.
The rubbers futures are projected to continue the losses on strong selling interest initially on Friday. TOCOM September futures are also trading down at ¥436.20 per Kg. on lower level buying. Rising concern due to earth quake on Japan might pressurize the 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 and open interest are falling while volumes are rising. Market is running out of traders willing to open or hold an open short/sell. 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.
Shanghai Futures (SHFE)
The SHFE active July 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/Rubber-to-continue-downtrend-on-short-selling-23218.html)