Asia Rubber Futures Settle Down; Trade Thin On Tocom Closure

SINGAPORE (Dow Jones)--Asian rubber futures settled lower in very thin trade Monday, with the closure of the bellwether Tokyo Commodity Exchange for a public holiday in Japan damping interest elsewhere, said market observers. Trading on Tocom and the Central Japan Commodity Exchange resumes Tuesday. The International Rubber Consortium said Monday it will discuss the recent slump in rubber prices and possible intervention measures to try and stabilize the market when it meets in Bangkok Thursday and Friday, IRCo said in a statement Monday.
IRCo represents the world's three biggest rubber producing countries - Thailand, Indonesia and Malaysia - and has a mandate to ensure natural rubber prices are remunerative to smallholders.
An IRCo official declined to comment on what measures would be discussed, but industry participants said limiting exports from the three member countries is one option open to the organization.
Malaysia's Minister for Plantation Industries, Peter Chin, said Malaysia will try to prevent a sharp fall in natural rubber prices by coordinating supplies with other members of the tripartite group of producers.
`We will have talks with Indonesia and Thailand for proper stock management, supply management and export tonnage,` Chin said on the sidelines of an international conference on rubber.
On the Shanghai Futures Exchange, rubber futures settled sharply lower, with most contracts ending the day at the exchange-imposed 6% lower daily limit, though the benchmark January 2009 contract rebounded slightly off the intraday low.
`Market participants intentionally avoided another limit-down session, which would trigger trade suspension tomorrow, followed by forced liquidation, which does no good to both buyers and sellers,` said Zhang Yong, an analyst at Nanhua Futures.
SHFE rubber has to fall to around CNY10,000 to fully match up with losses in Tocom rubber in the past two weeks, so the possibility of the market hitting limit-down again tomorrow cant be ruled out, Zhang said.
The benchmark January 2009 contract settled down CNY775 at CNY14,600/ton. On Sicom, rubber settled mostly lower in very thin trade, with the closure of Tocom damping interest, said a trader in Singapore.
RSS3 futures on the Agricultural Futures Exchange of Thailand also settled sharply down, again in very thin trade, with just 17 lots exchanged. Another steep fall on the SHFE encouraged another round of liquidation, while Tocom's closure damped trade. Further losses are now expected, though the focus will now turn to Tocom tomorrow, said a trader in Bangkok.
Asian cash rubber prices were also lower in thin volume with very few trades reported, again with traders citing Tocom's closure for damping interest, said traders.
Buyers are reluctant due to expectations that prices will ease further still in the coming days, while processors also are not keen to sell at current prices, said a trader in Singapore.
The recent slump in prices has led to an increase in deferments on shipments by buyers, though most contracts have been settled by re-negotiation, he said.

Asian Rubber Futures
Oct 13 Change from
Oct 10 Close
Tocom Mar RSS3 Market Closed -
C-Com Mar RSS3 Market Closed -
Shanghai Jan SCR5 CNY14,600/ton Dn CNY775
Thai May RSS3 THB63.75/kg Dn THB3.50
Sicom Nov RSS3 Untraded -
Sicom Nov TSR20 180.50 U.S cents/kg Dn 3.50 cents/kg

The following are today's physical prices in Asia, quoted in U.S. cents a kilogram, FOB basis
Grade Shipment Oct 13 Oct 10
Bids Offers Bids Offers
RSS3 Nov - 196 - 199
STR20 Nov - 194 - 196
SIR20 Nov - 196.2 - 200.6
SMR20 Nov - 194 - 196
USS3 Oct THB54.01/kg THB64.09/kg

Source : Dow Jones Newswires Monday, 13 October 2008 18:05:38