NMCE Rubber plunges on profit selling

NMCE rubber futures traded down after gaining for 2-3 session on Saturday. Profit selling on huge gains pulled down the prices.
However, positive trend in domestic spot market limited the losses. Rubber futures at TOCOM were also ended on positive note on Friday. However, active profit selling pressurized the prices and futures at NMCE ended the day in red.
The rubbers futures are projected to continue the losses initially on active selling at higher levels. However on cues from positive domestic and international market prices might reverse the trend later in day.
TOCOM August futures are also trading positive at ¥418.50 per Kg. Reports of government of Thailand has asked exporters to stop the shipments as Auto manufacturing companies in Japan have resumed their activity is likely to push the prices.
Factors to Watch For
As per deputy head of the China Rubber Industry Association, Natural-rubber demand in China, the biggest consumer, will rise 8% this year. Consumption will be 3.24 million metric tons, while tire output will climb 7.9 percent to an all-time high of 453 million units
As per the Committee on rubber policy of Thailand Government, Thai government will negotiate with commercial banks to extend loans to exporters to buy rubber from farmers at a minimum price of 120 baht per Kg
According to rubber board of India, Indian February Natural Rubber Output is 54,500 Tons Vs 51,500 Tons, consumption is 79,000 Tons Vs 76,350 Tons and imports are 6,831 Tons Vs 12,278 Tons
As per data released by rubber board, the year end deficit in natural rubber in India is estimated around 1.2 lakh tons and it is expected to be increase to 2 lakh tons during 2011-12
According to the Rubber Research Institute of Thailand, physical price of Thai rubber was up by 1.5 percent to 137.25 baht ($4.51) a kilogram on Wednesday
According to the Association of Natural Rubber Producing Countries, Consumption in China, India and Malaysia, representing 48% of global usage, will increase this year
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE March contract, prices and volumes are falling while open interest is rising. it is a good indication that a sharp rally against downtrend will develop creating a sell point for Downtrend.
Japan Futures (TOCOM)
The TOCOM active August contract, prices are rising while volumes and open interest are falling. Market is running out of traders willing to open or hold an open long/buy. Traders are liquidating both loosing short positions & closing winning long positions. A higher probability the market is set to retrace in price lower at some point.
Shanghai Futures (SHFE)
The SHFE active July contract, prices, volumes and open interest all are falling. If the total open interest is falling off and prices are declining, the price decline is being caused by disgruntled long position holders being forced to liquidate their positions. Technicians view this scenario as a strong position technically because the downtrend will end as all the sellers have sold their positions, creating fresh buying opportunity at lower levels.