TOCOM Rubber Seen at 395 Yen/Kg by End-June

Tokyo rubber futures were expected to be steady below the 400 yen level during the months of June and July, supported by limited supply at a time when demand is likely to remain strong, a Reuters poll showed on Wednesday (June 1).

The benchmark sixth-month rubber contract on the Tokyo Commodity Exchange, currently November 2011, was forecast to be at 395.0 yen per kg by the end of June, according to the median forecast of 10 analysts and dealers polled by Reuters.

That is 1 percent above the actual close of 390.7 yen at the end of May, almost 13 percent higher than the forecast of 350 yen in a similar poll at the end of April.

The benchmark, which dropped below 400 yen in late April, snapped two straight months of losses to close up 0.4 percent in May, but gains were capped by several rounds of profit-taking, weaker oil prices and a rise in the Japanese yen.

The price remained relatively strong, staying above the psychological level of 390 yen in late May as tight supply lent support, dealers said.

"Limited supply in major producing countries, especially in Thailand, and strong demand from the car industry worldwide are the key factors that should help support prices in the coming month," said a trader at Thailand's Hat Yai rubber centre.

Farmers in Thailand, the biggest producer and exporter, have resumed tapping but supply has not risen to normal levels because unseasonable rain has disrupted work.

Global natural rubber production in 2011 is forecast to be 9.936 million tonnes, according to the Association of Natural Rubber Producing Countries (ANRPC), lower than its previous estimate of 10.025 million.

Another dealer in Tokyo said: "Rubber stocks at Shanghai warehouses have fallen to a very low level, reflecting very tight supply and strong demand."

Rubber inventories monitored by the Shanghai Futures Exchange stood at 5,065 tonnes as of early May, the lowest in at least two years.

Given strong demand and limited supply, the benchmark TOCOM rubber contract was expected to remain relatively firm at 392.5 yen per kg by the end of July, with negative factors such as a stronger yen stopping it from going above 400 yen.

"TOCOM prices are likely to move sideways in June and July," said Kazuhiko Saito of Fujitomi Co. Ltd in Tokyo.

On the physical front, the benchmark Thai smoked rubber sheet (RSS3) was forecast to be at $5.05 per kg by end-June, slightly lower than $5.18 per kg offered at the end of May.

Forecasts for TOCOM sixth-month prices in yen/kg:

	end-June	end-July
Median	395.0	392.5
Lowest	380.0	370.0
Highest	410.0	430.0
1.CV Roben	400-410	420-430
2.Fujitomi Co.	380-400	380-400
3.Unattributable	400	380
4.Supara Rubber	400	425
5.Yong'an Futures	380	420
6.D.S.Futures	400-410	380-390
7.Unattributable	380-390	370-380
8.Unattributable	390	400
9.Unattributable	400	395
10.Unattributable	380-390	390

Forecasts for Thai RSS3 in U.S. dollar per kg:

	end-June	end-July
Median	5.05	5.08
Lowest	4.80	4.80
Highest	5.22	5.20
1.Supara Rubber	5.20	5.20
2.Yong'an Futures	4.80	5.20
3.Unattributable	5.00	4.80
4.Unattributable	5.10	5.00
5.Unattributable	5.00	4.80
6.Unattributable	5.22	5.15

Forecasts for Thai STR20 in U.S. dollar per kg:

	end-June	end-July
Median	4.65	4.62
Lowest	4.50	4.30
Highest	4.74	4.90
1.Supara Rubber	4.74	4.74
2.Yong'an Futures	4.50	4.90
3.Unattributable	4.70	4.50
4.Unattributable	4.60	4.40
5.Unattributable	4.50	4.30
6.Unattributable	4.74	4.78

Forecasts or Malaysia SMR20 in U.S. dollar per kg:

	end-June	end-July
Median	4.65	4.60
Lowest	4.50	4.30
Highest	4.73	4.90
1.Supara Rubber	4.70	4.70
2.Yong'an Futures	4.50	4.90
3.Unattributable	4.73	4.78
4.Unattributable	4.60	4.50
5.Unattributable	4.70	4.50
6.Unattributable	4.50	4.30

Forecasts for Indonesia SIR20 in U.S. dollar per kg:

	end-June	end-July
Median	4.70	4.65
Lowest	4.40	4.50
Highest	4.70	4.75
1.Supara Rubber	4.70	4.70
2.Yong'an Futures	4.40	4.40
3.Unattributable	4.70	4.75
4.Unattributable	4.70	4.60
5.Unattributable	4.60	4.50
6.Unattributalbe	4.70	4.50