Tokyo rubber futures could trade this week near their lowest in more than a month because of high inventories, while Indonesian robusta coffee premiums may fall ahead of the main harvest, dealers said on Monday.
Tokyo rubber futures set the tone for physical prices. The most active rubber contract on the Tokyo Commodity Exchange, currently September, fell 1.9 yen to settle at 221.2 yen a kg on weaker Japanese equities and oil prices, not far from a five-week low of 219 yen hit last week.
The contract has dropped more than 19 percent so far this year, mainly due fears of slowing demand from main consumer China.
Inventories in warehouses monitored by the Shanghai Futures Exchange fell 3.0 percent week-on-week, the exchange said on Friday, but dealers estimated the closely watched rubber stocks at bonded warehouses in Qingdao have gained around 24 percent to about 360,000 metric tons since January.
Rubber stocks in Japan have risen as well.
“Shanghai stocks may have been declining in previous weeks. But I don’t think this is any cause for supply concerns because if we look at rubber stocks in Qingdao and Japan, they are increasing,” said Vanessa Tan, an investment analyst at Phillip Futures in Singapore.
“The rubber market is still well-supplied. Resistance is pegged at 240 and support at 210,” Tan added.
The coffee market could be dictated by supply, with Indonesian robusta premiums expected to slip as the main crop starts later this month. Indonesian robustas compete with Vietnamese coffee.
Sumatran grade 4, 80 defects were offered at premiums of $80 to $100 a metric ton to London futures on Monday, unchanged from last week, but bids were much lower at $30 a metric ton.
Indonesia’s coffee output may fall to 9.5 million 60-kg bags in 2013/14 from 10.5 million in 2012/13, according to the US Department of Agriculture (USDA). Dry weather at the start of the season reduced flowering and excessive rain during cherry development cut yields, the USDA said.
In the sugar market, Thai raw premiums could edge up this week because of less offers for spot cargoes from rival Brazil, but the global market is still under pressure from a surplus of around 4 million metric tons in 2013/14.
Thai high polarisation, or hipol, raw sugar was offered last week at 55 to 65 points premium to the New York front-month contract, which gained 1 percent to close at 17.35 cents/lb on Friday on concerns over the possible impact of El Nino.
“There has not been a notable change to sugar fundamentals over the past few weeks, and as such, the flow of speculative money has been a key driver of price action,” said Luke Mathews, a commodities strategist at Commonwealth Bank of Australia.
The cocoa market could see butter ratios unchanged at 2.39 to 2.40 times London futures <0#LCC:>, with chocolate makers already well covered ahead of Easter.