Tokyo rubber in wide range; Premiums may strengthen

Tuesday, 5 November 2013 00:01 - - {{hitsCtrl.values.hits}}

Reuters: Tokyo rubber futures may trade in a wide range this week ahead of the release of important U.S. data that could influence the timing of the Federal Reserve’s plan to reduce stimulus, dealers said on Monday. Among other soft commodities, Thai raw sugar premiums are likely to move in familiar ranges, coffee premiums in Vietnam and Indonesia may rise if London futures extend losses, but cocoa butter ratios may soften below last week’s 2.70 times London futures as prompt demand wanes. The most active April rubber futures on Tokyo Commodity Exchange were untraded on Monday, a holiday in Japan. They had ended Friday at a one-week low of 259.8 yen a kg, down 1.8 yen.

“The market will be highly volatile ahead of the release of any economic data, looking for clues when the Fed will taper the monetary stimulus. We are waiting for the non-farm data on Friday and it could be lower than expected,” said Vanessa Tan, an investment analyst at Phillip Futures in Singapore. “The Fed may maintain the stimulus until next year, which will devalue the dollar and cause the yen to strengthen. That will weigh on TOCOM rubber. I am looking at resistance at 272 yen this week and support at 253 yen.” Although TOCOM rubber sets the tone for tyre grade prices in main producers Thailand, Indonesia and Malaysia, the contracts are often influenced by macroeconomics, currencies, equities and even the price of crude oil.

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