NMCE Rubber continues uptrend on fresh buying

NMCE rubber futures continued the gains on fresh buying on 3rd consecutive day on Tuesday. On opening itself prices started trading higher on strong buying interest. Domestic spot market also witnessed good recovery in prices amid limited supply.
TOCOM August futures also traded higher on fresh buying at lower levels and settled at ¥476.00 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 fresh buying on Thursday. Taking cues from positive spot market activity prices at futures might remain higher. Rains in major growing region of Kerala might support the prices.
TOCOM rubber August futures are also trading up at ¥482.50 per Kg continuing the previous recovery. Moreover, political tensions in Libya are also easing down which might also support the prices. Thus, on cues from above stated factors rubber futures are likely to continue the recovery today. However, profit booking on gains cane not be overruled.
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
People’s Bank of China has increased the interest rate by 50 basis which is pressurizing the rubber prices as China is the largest consumer of natural rubber
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 are rising while volumes and open interest are falling. 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.
Japan Futures (TOCOM)
The TOCOM active August contract, prices and open interest are rising while volumes are falling. Market is attracting late buyers & early shorts; market is vulnerable to a sharp correction but likely that that correction will be bought creating a buy point for uptrend.
Shanghai Futures (SHFE)
The SHFE active July contract, prices and open interest are decreasing 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.