POLL-TOCOM rubber seen at 190.0 yen/kg by end-October

Published: 09 Oct 2009 21:23:25 PST

BANGKOK, Oct 1 - Tokyo rubber futures were likely to slip in October due to a firming yen but tight supplies in producing countries and expectations of steady demand from China could cushion the fall, a Reuters poll showed on Thursday.

The benchmark rubber contract on the Tokyo Commodity Exchange <JRUc6>, currently March 2010, was forecast to reach 190.0 yen ($2.11) per kg at the end of October, according to the median forecast of 10 analysts and dealers.

That was lower than the end-September close of 196.7 yen and 7.3 percent lower than the previous forecast of 205.0 yen made in a similar poll in early September.

"Rubber has been on the uptrend since July 2009. The price was at around 150-160 yen in July and then went up to above 200 yen without any notable correction," said Suryadi Mulya, director of rubber trading firm CV Dramaga.

"Now the price is still consolidating and trading in a wide range of 190 to 215 yen. Any breakout of this range will dictate future trend," he said.

Tokyo rubber market, which sets the tone for physical prices, rallied to an 11-month high of 218.4 yen per kg on Sept. 10 before losing some strength on the back of a strong yen, which hurts yen-priced rubber futures.

Most-active March contract <JRUH0> added 6.1 yen per kg to 202.8 yen on Thursday.

"If the yen stop strengthening, the market could trade around 200 yen, but no sharp gains are likely if the yen hover around 90 yen," said a dealer at a brokerage in Tokyo.

The dollar inched up 0.3 percent from late U.S. trade to 89.94 yen <JPY=> but held near an eight-month trough of 88.23 yen hit earlier this week on trading platform EBS.

The dollar lost nearly 7 percent against the yen in the previous quarter just ended on Wednesday as investors dumped the dollar on a fall in U.S. Treasury yields. [USD/]

In theory, a firmer yen makes a dollar-based rubber commodity cheaper and usually encourages investors to sell rubber futures contracts to stop losses.

A strong yen could also drag down Tokyo rubber futures to 180 yen per kg at the end of November, according to the poll, but dealers remained hopeful about demand from main consumer China despite a dispute with the United States on import duties.

"The impact from the U.S. tariff on Chinese tyre industry is seen limited as hefty domestic demand is a major momentum," said Lin Hui of a Shanghai-based Orient Securities Futures.

China's rubber association has urged the central government to increase tax rebates, reduce export tariffs and to buy more domestically-made tyres to offset the effect of new import duties imposed by the United States. [ID:nPEK281045]

On the physical front, tight supplies in Thailand, Indonesia and Malaysia because of erratic weather could help prices defy pressure from Tokyo futures.

"Supply in October may still be tight because Thailand is being hit by persistent rains, while Indonesia is in the middle of the dry season," said a trader at Thailand's Hat Yai rubber centre.

Thai RSS3 was forecast to stay at $2.13 per kg by end October, slightly lower than $2.18 per kg at end September.

Malaysia's SMR20 could slip to $2.00 per kg, from $2.13 per kg, while Indonesia's SIR20 would be slightly changed at $2.00 per kg. Forecasts for TOCOM sixth-month rubber prices in yen per kg:

end-October end-November

Median 190.0 180.0

Lowest 170.0 160.0

Highest 220.0 230.0 1. Unattributable 200 180 2. Unattributable 190 160-180 3. Shcifco Futures 170 160 4. Orient Securities Futures 185 170 5. Unattributable 180 180 6. CV Roben 180-200 170-190 7. Unattributable 190 200 8. A.T.S. Rubber 220 230 9. Supara Rubber 210 210 10. Unattributable 195-205 195-205 Forecasts for Thai RSS3 in U.S. dollar per kg:

end-October end-November

Median 2.13 2.08

Lowest 1.85 1.85

Highest 2.20 2.30 1. Unattributable 1.85 1.85 2. Unattributable 2.00 2.00 3. A.T.S. Rubber 2.20 2.30 4. Supara Rubber 2.20 2.20 5. Unattributable 2.10-2.20 2.10-2.20 6. Unattributable 2.10 2.00 Forecasts for Thai STR20 in U.S. dollar per kg:

end-October end-November

Median 2.03 2.03

Lowest 1.75 1.75

Highest 2.10 2.15 1. Unattributable 1.75 1.75 2. Unattributable 2.00 2.00 3. Unattributable 2.10 2.10 4. Supara Rubber 2.15 2.15 5. Unattributable 2.05 2.05 6. Unattributable 2.00 2.00 Forecasts for Malaysia SMR20 in U.S. dollar per kg:

end-October end-November

Median 2.00 2.00

Lowest 1.75 1.75

Highest 2.15 2.15 1. Unattributable 1.75 1.75 2. Unattributable 2.00 2.00 3. Unattributable 2.00 2.00 4. Supara Rubber 2.15 2.15 5. Unattributable 2.05 2.05 6. Unattributable 2.00 2.00 Forecasts for Indonesia SIR20 in U.S. dollar per kg:

end-October end-November

Median 2.00 1.98

Lowest 1.75 1.75

Highest 2.13 2.05 1. Unattributable 1.75 1.75 2. CV Roben 1.91-2.09 1.87-2.05 3. Unattributable 2.00 2.00 4. Unattributable 1.80 1.90 5. Supara Rubber 2.13 2.13 6. Unattributable 2.00 2.00 ($1=89.97 yen) (Additional reporting by Chikako Mogi in Tokyo, Alfred Cang in Shanghai and Aloysius Bhui in Jakarta)