Tokyo rubber faces tough resistance, sugar premiums may rise

rubber

High rubber inventories will weigh on Tokyo rubber futures this week, but sugar premiums could edge up after New York futures fell on easing day weather concerns in main producer Brazil, dealers said on Monday.

In the coffee market, higher domestic prices in top robusta producer Vietnam could spur more selling, while cocoa butter premiums in Asia may strengthen on demand from chocolate makers for spot and nearby delivery.

The most active rubber contract on the Tokyo Commodity Exchange, currently August rose to 244.8 yen a kg, its strongest since Jan. 24, before easing to 237 yen, down 3.2 yen. The contract gained nearly 4 percent last week.

The Tokyo market, which sets the tone for tyre grade prices in Southeast Asia, could trade in a range of 233 to 248 yen a kg this week, with key resistance at 250 yen.

“There are high inventories in both Tokyo and Shanghai. Actually, demand is not very good,” said Gu Jiong, an analyst at Yutaka Shoji Co in Tokyo. “The whole mood in the market is not too strong to push prices over 250 yen.”

Although rubber inventories in warehouses monitored by the Shanghai Futures Exchange fell 2.1 percent last week to 192,475 tonnes, stocks in the closely-watched bonded warehouses in the port of Qingdao have risen to around 340,000 tonnes from around 290,000 tonnes in January.

Crude rubber inventories at Japanese ports stood at 21,456 tonnes as of Feb. 28, up 3.6 percent from 10 days earlier.

In the sugar market, Thai raw premiums could rise slightly from last week’s 35 to 45 points following a correction in New York’s front-month contract. Futures and premiums usually move in opposite directions.

“If we look at the fundamentals, there appears to be some bearish factors. Firstly, Brazil started its cane crushing early and this suggest that the market could see an increase in raw sugar supplies in the near term,” said Vanessa Tan, investment analyst at Phillip Futures in Singapore.

“Secondly, Indian sugar supplies are gaining competitiveness in the global sugar market. Aided by the government, Indian sugar millers increased exports of raw sugar to the global market, potentially taking up market share from Brazil.”

Thai sugar premiums have been under pressure from the prospect of a record crop in Thailand in the current crushing season, ample global supply as well as competition from Brazil and India

COFFEE, COCOA

Coffee sellers in Vietnam could offer robustas at bigger discounts as more beans enter the market after domestic prices regain the psychological level of 40,000 dong a kg. Consumers may wait for Indonesian premiums to ease before making purchases.

In addition to support from spot demand, Asian cocoa butter could track European butter ratios higher.

Source: The Star Online
Published: 17 Mar 2014