10 March 2011
Natural rubber prices are unlikely to fall sharply for the remainder of the first half of 2011 after intense declines recently, the acting chief executive of the International Rubber Consortium, Yium Tavarolit, said Thursday.
"Natural rubber prices had risen beyond market fundamentals in the last few months, so investors want to take profit now as it is a suitable time to liquidate long positions due to geopolitical violence in the Middle East causing them to look for safe havens," said the Bangkok-based Yium.
Benchmark natural rubber futures on the bellwether Tokyo Commodity Exchange rose to a record high of Y535.7 a kilogram on Feb. 18 in an extended rally that saw prices hitting successive record highs from December before falling sharply in the last two weeks. Many in the trade, including Yium, attributed the rise to excessive speculation.
Sentiment then turned negative after tension in the Middle East damped risk appetite and cast doubts on economic growth in the face of high oil prices.
The benchmark August Tocom rubber contract was trading at Y417.1/kg at 0540 GMT.
Prices fell 8.7% Tuesday and as much as 3.7% Wednesday.
"I don't know if prices have bottomed out, but I don't expect rubber prices falling sharply again in the first half of the year," said Yium, who is also chief secretary and economist at IRCo.
"In the history of the rubber market, we have never seen prices falling in the first or second quarters of the year."
Yium said supply-demand fundamentals are firm with major producing countries entering the low-production season, and with the global economy in relatively good shape.
(Source: http://www.irco.biz/BlogMoreDetial.php?id=2731&ShowContent=news)
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