RUBBER-TOCOM ends flat; weak yen offsets lower oil

RUBBER-TOCOM ends flat; weak yen offsets lower oil

RUBBER-TOCOM ends flat; weak yen offsets lower oil

21-Jul-2015 03:37:25 PM

TOKYO, July 21 (Reuters) - Benchmark Tokyo rubber futures ended little changed on Tuesday as the impact of a weaker yen offset downward pressure from lower oil prices.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, have lost momentum after gaining nearly 8 percent since hitting a two-and-a-half-month low on July 9.

The Tokyo Commodity Exchange rubber contract for December delivery JRUc6 0#2JRU: finished 0.1 yen higher at 214.9 yen per kg, after settling down 1.1 yen on Friday. Japanese markets were closed on Monday for a national holiday.

"Overall, the market was in net selling positions, and that did not change as the market was stuck around 215 yen level," said a source with a Tokyo-based broker.

The most-active rubber contract on the Shanghai futures exchange for January delivery SNRcv1 rose 280 yuan to finish at 13,480 yuan per tonne.

Oil prices edged lower on Tuesday, dragged down by a firm dollar and ample supply of both crude and refined products. O/R

The U.S. dollar hovered near five-week highs versus the yen on Tuesday after a top Federal Reserve official added to expectations that U.S. interest rates could be raised as early as September. It was quoted around 124.38 yen JPY=, compared with around 124.01 yen on Friday afternoon. USD/

The front-month rubber contract on Singapore's SICOM exchange for August delivery STFc1 last traded at 146.70 U.S. cents per kg, down 0.9 cent.


Natural rubber production (from 3 ARNPC member countries) fell by 0.7% for the first half of 2015

Natural rubber production as reported in the Natural Rubber Trends and Statistics of the Association of Natural Rubber Producing Countries (ANRPC) (Vol. 7. No. 6/June 2015), fell by 0.7% (-35,000 MT) to 5.041 million MT in the first half of 2015 as compared to 5.076 million MT in the same period of 2014.


The decrease of NR production in 9 ANPRC member countries were mainly due to unattractive prevailing low NR price which discourage smallholders to tap as well as the prolonged hot and dry weather from El Nino particularly in Southeast Asia.


On the other hand, the International Rubber Study Group in its latest report stated that the NR production for 2015 would increase by 4.4% to 12.6 million MT from 12.07 in 2014.


Judging from current production scenario, IRCo is of the view that the global NR production in the second half of 2015 would not increase as much, if price remains low and weather continues to be dry.


Latest update in Thailand, the biggest producer of NR confirmed the El Nino effect. Its Government has ordered provincial governors to work with the military and police to stop farmers from diverting water to farmland. Thailand’s Prime Minister Prayut Chan-o-cha has even warned farmers to brace for the impact from reduced dam water releases.