Rubber futures rally as supply-side concerns grow

Tokyo – Natural rubber (NR) futures rallied across all exchanges during the trading week ended 15 March, according to the Japan Exchange Group (JPX).

Concerns over supply shortages, robust physical demand, and the influence of the El Niño weather pattern prompted the uptick, JPX reported 18 March.

“Speculators and commodity funds were actively involved in the market, contributing to the upward momentum in rubber prices over the past few weeks,” said JPX in its weekly NR report.

OSE rubber futures rallied 12.4%, reaching a seven-year high as lower production in Thailand and a shortage of latex triggered “a buying frenzy in OSE RSS3 futures”.

On the Shanghai Futures Exchange (SHFE), rubber pricing closed up 4.6% week-on-week, driven by “speculative funds increasing their long positions”, said JPX.

Open interest in SHFE added 81,000 lots over the past two months.

China’s other rubber exchange the INE rubber, meanwhile, recorded a 3.6% increase in nr futures amid “heavy trading volume” and fresh buying interest.

On Singapore's SICOM exchange, rubber futures climbed 3.6% due to strong spread and arbitrage buying.

Despite the bullish NR trading scenario, JPX commented that rubber prices on all exchanges had “entered the overbought territory.”

Citing 'rubber support interests' (RSI) indicators, JPX said OSE was overbought by 87.3%, SHFE by 80.8%, INE by 73.5%, and SICOM by 74.3%.