Asian rubber futures settled lower Thursday as investors took profits on a surge in rubber prices of about 11% in less than two weeks.
The benchmark Tocom July RSS3 rubber contract settled Y2.3 lower at Y295.8 a kilogram.
Tocom's direction Friday is unclear, as many investors are waiting for the reopening of Chinese markets next week for fresh leads and confirmation of demand levels. The Shanghai Futures Exchange is closed for the Lunar New Year holidays this week.
Prices on Tocom continued to ease in the night session, with the July contract settling at Y293.7/kg. Night session prices aren't included in intraday trading.
Physical prices were mixed as Thai prices continued to rise due to supply worries and strong demand.
However, daily arrivals of the USS3 raw material in the three central markets of Thailand increased 75% Thursday, as more stock was released from inventories to take advantage of higher prices. Rubber factories are paying more than TH100/kg outside the central markets.
"Signs are pointing to an economic recovery, thus increasing demand, and there are fears that El Nino will (decrease) rubber production this year," an executive at a Thai rubber factory said.
The El Nino climate episode may have contributed to unusual changes in Thailand's wintering season, when rubber trees shed leaves and dry weather reduces yields.
Instead of starting from the north of Thailand as usual, the wintering season first emerged in the southern region, where around 70% of the country's natural rubber is produced, taking the supply offline sooner than expected. The season also started earlier than usual, in the middle of February rather than late in the month.
The benchmark September RSS3 contract on the Agricultural Futures Exchange of Thailand settled THB1.4 lower at THB105.40/kg.
(Source: irco.biz)
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