NMCE Rubber continues uptrend on active buying

NMCE rubber futures continued the bullish trend on 3rd consecutive session on active buying interest Thursday. On opening itself prices started trading higher on strong buying interest.
Domestic spot market also witnessed good recovery in prices amid limited supply. TOCOM futures also traded higher on fresh buying at lower levels and but settled at slightly lower note shading the gains made in morning.
TOCOM August closed at ¥470.60 per Kg. Prevailing rainy conditions in major rubber growing region of Kerala also supported the upside in prices. However, prices took small corrections during the day but overall buying interest pushed the prices up and futures ended the day on higher note.
The rubbers futures are projected to continue the positive trend on extended fresh buying on Friday. Taking cues from positive spot market activity prices at futures might remain higher.
Rains in major growing region of Kerala might support the prices. However, TOCOM rubber August futures are trading down today at ¥466.80 per Kg. Thus, on cues from negative international market prices might take sharp corrections on profit booking during the day.
Factors to Watch For
The stock of natural rubber in the country till January 30, 2011, is estimated at 3,27,115 tons, according to chairman of Rubber Board of India
Natural-rubber inventories monitored by the Shanghai Futures Exchange is reported around at 58,058 tons, which is down by 62 % from last year’s highest inventory levels of 151,832 tons
According to the Association of Natural Rubber Producing Countries, Natural-rubber consumption in China and India may rise 9 percent to 3.6 million tons this year and 5.2 percent to 991,000 tons respectively
According to Passenger Car Association, passenger-car sales increased 16.2 percent Y/Y to 1.53 million last month
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE February contract, prices and volumes are rising while open interest is falling. Market has a lot of traders initiating from both sides but larger traders may be liquidating into the higher prices. The market may be vulnerable to large price swings as shorter time frame traders attempt to trade from both sides of the market but liquidating before end of- day. Often a signal of a market turns near-term or continued volatility.
Japan Futures (TOCOM)
The TOCOM active August 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.
Shanghai Futures (SHFE)
The SHFE active July contract, prices are rising while open interest and volumes are decreasing. 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.