Osaka Mercantile Exchange Rubber Monthly Report

On September 3, RSS3 futures distant month went lower at 70.5 yen reflecting the yen's rise to the 109 yen level against the dollar. Later, some bullish incentives appeared, such as the active demand due to the buoyant car sales in U.S., the tight supply of Standard Indonesian Rubber (SIR) due to a lack of tappers at rubber plantations in Indonesia and the price-rise in RSS3 in Thailand by buyers shifting from more expensive Technically Specified Rubber(TSR). Furthermore, the rubber stocks in Japan as of August 31 decreased by 2,240 tonnes to 45,595 tonnes. With these factors, on September 9, the prices turned sharply higher (spot month: 66.0 yen distant month: 76.8 yen) on short-covering and fresh buying by public investors. On September 10, the prices fell (spot month: 64.4 yen distant month: 74.5 yen) on selling for profit-taking as the yen had renewed this year's high at 107.65 yen against the dollar. On September 13, the prices declined further (spot month: 62.9 yen distant month: 72.9 yen) on long-liquidation due to a lull in the price-gains in the producing countries. Later, the prices trended downward as the yen surged against the dollar after the U.S. trade deficit of the second quarter renewed its high for two consecutive quarters, and on September 16, the prices sank (spot month: 61.0 yen distant month: 71.1 yen). On September 17, the prices rebounded (spot month: 64.6 yen distant month: 75.0 yen) on short-covering due to some bullish factors, such as only 52 lots applied for the quality inspection this month, a decrease in rubber stocks in Japan and the news that Thailand and Malaysia signed the Memorandum of understanding to co-operate in raising their domestic rubber prices to 80 U.S. cents. On September 21, the prices dropped (spot month: 61.5 yen distant month: 72.6 yen) on long-liquidation due to the higher yen. On September 24, spot month expired lower at 58.00 yen on liquidation by longs who had missed the opportunities to sell. Later, it was the reported that the rubber stocks in Japan as of September 20 fell below the 40,000 tonnes level to 39,783 tonnes, down 8,052 tonnes from the previous month. This report was received as one of the evidences for the rumor that a trade house had exported the physicals, that had been delivered from July and August in the market, to China and this attracted buying interest. On September 29, distant month rallied to 58.0 yen. There was the news that INRO might terminate the rubber pact due to Thailand's decision to withdraw from INRO. With this news and the unstable currency situation, on September 30, distant month fell to 72.3 yen on long-liquidation amid concerns over the higher level. On September 1, Rubber index futures prices were slightly easier at the open (spot month: 60.15, distant month: 66.30) on long-liquidation due to the yen's rise to the 109 yen level. Later, the prices edged up on short-covering and fresh buying reflecting the price-gains in TSR in overseas markets and the decrease in the rubber stocks in Japan. On September 9, distant month advanced to 69.60. On September 10, spot month expired lower at 63.72, down 0.12 from the previous day. On September 13, the new March contract month opened at 68.05. This was higher than February contract which opened at 67.45. Amid the yen's further gain, on September 16, distant month fell to 66.85 on long-liquidation as players grew cautious of the higher level after the rise in the prices for the past few days. On September 17, all contract month surged to the day's limit-highs on active short-covering and fresh buying due to the yen's drop and to the continued decrease in stocks in Japan as of September 10. On September 24, distant month recorded its life time low at 66.05 on selling by bears due to the yen's upturn and following the firmer tone in RSS3 futures market. The prices turned higher on buying by bulls because the rubber stocks in Japan as of September 20 fell below the 40,000 tonnes level for the first time in four months. On September 30, distant month ended lower at 66.35 following the report on Thailand's decision to withdraw from INRO. Throughout the month, amid no leads specific to rubber index futures except the situation of the rubber stocks in Japan and the outcome of INRO's meeting, the price movement at the market was mostly contingent on the direction of the yen against the dollar.