Asian rubber futures settled higher Monday on strong crude oil prices and optimism across asset classes as investors are starting to see the U.S. Federal Reserve's discount rate hike as a sign of strength in the U.S. economy, in contrast to their earlier concerns about monetary tightening.
The benchmark Tocom July RSS3 rubber contract settled at a one-month high of Y302.5 a kilogram. Tocom rubber futures spiked to an intraday high of Y302.7/kg when the Shanghai Futures Exchange reopened up 4.3% after a week-long holiday, but the gains in Tokyo were pared by profit-taking later in the trading day.
More upside is expected now that Tocom RSS3 futures have settled above the key Y300 psychological support level, traders said.
"But the prices of Tocom rubber in the next two days may be rangebound, as we may see crude oil prices in correction mode after reaching $80 per barrel (Monday)," a Tokyo-based trading executive said.
Prices on Tocom dipped during the night session on further profit taking, with the July contract settling at Y300/kg. Night session prices aren't included in intraday trading.
Shanghai Futures Exchange futures settled up 4% at CNY24,995/ton, catching up with gains of 3.7% on Tocom last week over the Lunar New Year break. Strong demand driven by domestic auto sales continues to underpin prices, with the prospect of drought in China's rubber-producing regions providing further support.
The benchmark September contract on the Agricultural Futures Exchange of Thailand also settled a tad higher at THB106/kg. Profit-taking set in after prices hit an intraday high of THB107.2.
In the physical market, prices of processed rubber rose on the back of the rally in rubber futures. Trading of Thai USS3 was mixed at the country's three central rubber markets Monday, but the winning auction price at the Chandee central market exceeded TH100/kg.
(Source: irco.biz)
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