【Fujitomi】Tokyo Rubber near-term prices surged significantly

(Tokyo crude oil and petroleum products)
On the 6th, Tokyo crude oil and petroleum products fell due to the yen’s appreciation and disappointing inventory statistics. The crude oil futures for September fell 350 yen to 36,590 yen, the gasoline futures for October fell 280 yen to 49,860 yen, and the kerosene futures for October fell 310 yen to 48,080 yen.
The market anticipated buying due to the U.S. EIA inventory statistics, and crude oil futures traded around 37,500 yen in after-hours trading. However, contrary to market expectations, the U.S. EIA inventory data was bearish, and following that, Tokyo prices also weakened in line with overseas crude oil declines. Still, with the yen weakening, crude oil futures stayed in the 37,000 yen range. Then, the FOMC minutes triggered a sharp drop in the New York Dow, and the yen strengthened, pressuring the Tokyo oil market across the board. In-day trading saw the yen strengthen further, and the market updated its night session lows, with the night session highs turning into roughly a 1,000 yen drop by 9 a.m. The crude oil futures fell to 36,490 yen, but the decline paused for the moment. In Tokyo, demand at reasonable levels supported prices, so the decline narrowed. Before 3 p.m., crude oil was sold off, making new lows, but the Nikkei index fell sharply again, the yen strengthened again, and the NYMEX oil products also widened their declines, contributing to the downward move. Regarding the U.S. EIA inventory statistics, U.S. crude oil production rose for the sixth consecutive week. Since this increase is clearly bearish for prices, one would expect a further drop in overseas crude in after-hours trading.

(Tokyo precious metals)
On the 6th, Tokyo gold fell as the yen strengthened, with the February gold futures down 11 yen to 4,441 yen, and the February platinum futures down 26 yen to 3,402 yen.
Tokyo gold remains characterized by mixed supportive and resisted factors, with trading activity fluctuating. After the U.S. FOMC minutes, the NY Dow collapsed and the yen strengthened. Following the NY Dow’s breakdown, NY gold surged, and after the resumption, NY gold briefly recovered to the 1,260-dollar range. However, after 10 o’clock, NY gold gains narrowed. The yen remained strong, and Tokyo gold faced selling equal to NY gold’s decline, forcing a soft tone from around 10 o’clock. NY Dow futures continued to fall, but NY gold hedge buying was weak, forcing a cautious approach around the 1,260-dollar level. A rise in U.S. long-term interest rates is bearish for gold, and the reduced gains in NY gold reflect this perception. As a result, Tokyo gold dipped below 4,440 yen in the early afternoon, expanding its downside. With Friday’s U.S. employment data likely to be strong, the outlook for gold is expected to remain challenging through the weekend.

(Tokyo rubber)
On the 6th, Tokyo Rubber extended gains for the near month, while the far-month contracts slightly declined. The August futures fell 2.0 yen to 248.7 yen.
The near-month contract has remained strong, supported by the current bullish sentiment, despite the yen’s strength and the stock market’s sharp drop. A cornering market is being encouraged by exchange-imposed action to funnel trading into the near-month, causing the near-month to surge, and the previous day’s sharp rise in the far-month to be a trigger for that. In the morning, the far-month was heavily sold on concerns about the yen and NY Dow declines, but the near-month’s rapid rise reduced the downside. The next-month declined to 244.1 yen by 9 a.m., updating the night session’s lows. The pace of the plunge did not continue for long. Given the near-month’s decisive performance, nearby-months showed strength, suggesting that continued consolidation for a longer period may lead to higher prices. Therefore, one should keep an eye on the near-month. After noon, the near-month’s gains narrowed, and the other months also retraced. From 2:30 p.m., buying interest appeared, with near-month gains halting while the far-month was bought again, pushing the near-month back to the 248 yen level before 3 p.m. The market did not treat stock price declines or a strong yen as negative factors, but instead moved mainly on internal factors. The close saw the near-month rise back into the 249 yen range, updating the day’s high in the session.

(Tokyo corn)
On the 6th, Tokyo corn was sold off on the back of a stronger yen and the Chicago market’s decline after the market reopened. The March futures were down 120 yen to 21,740 yen.
In after-hours trading, there was a mix of buying and selling, but the yen’s rise at the end of the session led to a slight decline. In daytime trading, the yen strengthened further, and the front-month fell below 21,800 yen again. The previous day, the front-month rose toward the close, so a rebound correction was expected, but the front-month’s drop below 21,800 yen was natural, though overall the decline was modest. Looking ahead to late-week heat in the U.S. Corn Belt, temperatures are set to rise, which is favorable for planting. If Chicago’s weather remains soft, the market is expected to stay in a soft trend, maintaining a stance of selling declines in the near term. After 1 p.m., the market saw corrective selling, with the front-month extending the decline, but given the high price levels, further adjustments could still be necessary.

(Tokyo U.S. soybeans)
On the 6th, Tokyo general soybeans traded lightly, with the futures for February down slightly. The February futures were down 120 yen to 46,590 yen.
Chicago rebounded, but compared to Tokyo’s daytime levels, Chicago is still lower, and with the yen advancing, the near-months softened. In Chicago, expectations of large soybean purchases as a result of President Xi’s visit to the U.S. remain limited at present. As the demand and supply report on the 11th approaches, Chicago’s soft trend is expected to continue, with near-months likely slipping below 46,000 yen.
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