On August 3, OME prices advanced further as the physical prices firmed on buying to meet the demand from consuming countries and on tight supplies by the rains in the producing areas. The distant contract rose sharply to 91.00 yen on short-covering by some dealers based in the producing countries and buying by bulls. On August 4, however, amid the yen's rise, the price gains were undermined on profit-taking due to the concerns over the higher level. The current and distant contract closed the week at 73.60 yen and 86.00 yen, respectively. The expected increase in the stocks due to the increased imports by trade houses added to the downward movement. Higher future prices had encouraged them to buy the physical rubber from the producing areas.
This week's volume in RSS3 futures market totaled 42,944 lots. The open interest totaled 28,845 lots as of August 4.
On July 31, carrying over the last week's strong sentiment, OME TSR20 futures opened higher on buying by bulls in response to the yen's weakness against the U.S. dollar. Distant July 2001 contract rose by 1.2 yen to 81.7 yen from the previous week's close. On August 1, OME prices declined on profit-taking due to the concerns about the overbought conditions. On the same day, however, amid the rise in physical prices, distant month turned sharply higher and hit the daily limit-high on heavy buying at the dip by participants following the firmer tone in RSS3 futures. On August 3, distant month advanced further to 87.8 yen on fresh buying and stop-loss buying as physical prices extended gains due to fears that rains in the producing areas might tighten the supplies.
Toward the weekend, however, amid the yen's rise, OME prices turned plunge on long-liquidation and profit-taking due to concerns over the recent rally. The fact that physical prices failed to follow the surge in Japanese rubber futures markets added to the bearish sentiment. On August 4, the distant contract hit the daily limit-low and closed the week at 82.4 yen.
"The last week's fall is a mere reaction to the recent sharp gain, and it is possible for the prices to extend further after a round of profit-taking as many participants still have buying interest," a trader said.
This week's volume in TSR20 futures market totaled 18,403 lots. The open interest totaled 11,443 lots as of August 4.
At the beginning of the week, on July 31, taking over the strong sentiment from the previous week, OME Rubber index futures opened higher on continued bulls' buying. Distant January contract extended the gain by 1.25 to 79.75 from the last week's close. On the same day, however, distant month fell to 78.95 on profit-taking due to the concerns about the overbought conditions.
Later, TOCOM RSS3 futures continued to trend upward on heavy buying by bulls. Furthermore, it was reported that the supplies in the producing countries had become tight due to the heavy rains. These factors encouraged bulls to build long positions actively in OME Rubber Index futures. On August 1 and 2, distant three months surged to the day's limit-highs. Distant month soared to 82.95. Toward the weekend, the spread between current and distant months widened to more than 12 points from 8 points on July 25. With this factor, on August 4, distant month declined to 80.95 on active selling for profit-taking amid participants growing cautious of the higher level for the past few days.
Participants are divided with regard to the outlook of the direction of the market. "I think the fall at the weekend was a mere correction after the recent sharp rise. The bullish sentiment will probably continue after a round of long-liquidation," a trader said. "Some foreign investors had built long positions actively since the end of July. But they seem to have liquidated their positions on profit-taking. For this reason, there will not be such a wide fluctuation in the prices," another trader said.
This week's total volume of trading totaled 52,576 lots. The open interest totaled 28,135 lots as of August 4.
