Market and product

IRCo's DCP wobbled but could end the week higher at 481.89 US cents/kg on Friday while rubber futures and physical rubber markets in the region also finished the week above 470 US cents/kg. An improvement of market sentiment and firm oil prices were major positive factors, which lent support for rubber futures to be on an upward trend despite profit-taking tried to cap gains.

It is forecast that current positive market sentiment and firm market fundamentals, a further weakening greenback, an expectation of Toyota to resume 90% of its normal capacity in June, low rubber inventories in China, and current rubber supply tightness during the rainy season in Thailand will support rubber prices to stay above 450 US cents/kg at least until the end of 2Q11.

The weak U.S economic growth was evidenced by the plunge in nonfarm payrolls to 54,000, and the unemployment rate rose to 9.1% in May, according to the U.S. Labor Department on Friday. Meanwhile, an expectation of a fresh aid package for Greece by European governments and the IMF restored confidence of financial investors. These were translated into a weak greenback and pulled down crude oil futures on Nymex to US$100.22 a barrel on Friday.

At the same time, the weak greenback convinced financial investors to move their funds to other safe havens so as to reduce risk aversion and to earn higher returns, including to the Japanese yen and Asian currencies.