Tokyo rubber pares gains as fund buying fades

Print this page Posted on : 05-30-2008 by recycleinme.com

Tokyo rubber reversed early gains to fall 1.6 per cent by the close on Thursday on a rush of long liquidation after buying by fund managers petered out. ''Rising above the high of late last week invited a wave of buying from investment funds mainly from abroad. But I think the climb further above ¥320 has been overdone,'' said a manager at a Japanese commodities brokerage firm, referring to a market rally earlier this week to a 28-year high. ''It was as if the market flared up at an instant. But now it's almost put off.''

The most active Tokyo Commodity Exchange rubber contract for November delivery closed down ¥5.2 a kg at ¥332.5 after falling from the day's high of ¥340.8. The near-term June contract was at ¥329.9 a kg, down ¥3 from the previous close. The distant November contract hit a peak of ¥345.9 on Tuesday, the highest for any benchmark contract since April 1980.

The brokerage firm manager said if oil and gold prices maintain their weakness, the key rubber contract could test ¥300 in the coming month. Tight supply in the physical market is supportive, analysts said. But if the Tokyo market alone factors that in, it should turn around and be in backwardation, rather than in contango as it is at the moment.

Source : Business Line