【Fujitomi】Tokyo Gold rises but gains narrow

(Tokyo crude oil and petroleum products)
Tokyo crude oil and petroleum products on the 29th rebounded sharply, supported by a rally in overseas crude. The October crude oil futures contract rose 630 yen from the previous week’s close to 36,080 yen, the December gasoline futures rose 420 yen to 48,610 yen, and the December kerosene futures rose 400 yen to 49,950 yen.
Encouraged by overseas crude’s surge at week’s end, the Tokyo oil market showed a broad advance, with buying extending by more than 1,000 yen from levels around 35,000 yen in the crude futures, and the 36,000 yen range was recovered. Monday’s Tokyo market, buoyed by WTI crude’s 50-dollar display, saw buying interest grow, pushing up to set new highs for the week’s start. After 10 o’clock, however, prices in WTI and NY gasoline weakened from their highs, giving the impression of a return toward 50 dollars in WTI. Initially, Tokyo did not weaken on the news and held on at high levels, but as WTI and Brent fell, the Tokyo market saw some relief selling, and although it finally eased to maintain the 36,000 yen range for the futures, an overly high price level appeared to have formed. Given the ongoing US crude production expansion trend, a return-to-seller stance seems prudent.

(Tokyo precious metals)
On the 29th, Tokyo gold continued to rise on the back of a sharp rise in New York gold, but the gains narrowed toward the close. Gold futures for April rose 21 yen from the previous week to 4,516 yen, and platinum futures for April rose 17 yen to 3,426 yen.
Uncertainty ahead of the UK general election led to a surge in NY gold over the weekend, which supported Tokyo gold to rise into the 4,520 yen range. Early in the week, Tokyo gold remained firm, with some upside in after-hours trading due to a yen weakness. NY gold markets are closed for the holiday, but electronic trading will be shortened. After noon, trading in the nearby NY gold August contract around 1,270 dollars or below dominated, and with the yen somewhat stronger, Tokyo gold’s gains were trimmed. The 4,520 yen level in the morning seems to have been a mirage for buy interest, which cooled, though event risk remains. Tokyo gold buying remains prudent.

(Tokyo rubber)
On the 29th, Tokyo rubber dropped sharply for the near-month, while other months fell from their highs. The November contract futures stood at 213.0 yen, unchanged from the previous week’s close.
In after-hours trading the front-month fell to as low as 210.2 yen, but since 210 yen level was preserved, there was a rebound as investors covered positions; in the morning it showed strength, hitting a high of 217.1 yen at 10 o’clock, but profit-taking expanded and by noon it fell back to the 212 yen region, returning to negative territory. The sharp drop in the near month remains a heavy shadow, but with growers entering peak production, pressure on shipments is unlikely to ease, so a cautious stance on selling rallies remains prudent. Shanghai rubber is closed for the holiday, but rubber stocks are rising further, so a further decline in Shanghai after the holidays is anticipated.

(Tokyo corn)
On the 29th, Tokyo corn benefited from Chicago’s gains and was bought again, but the gains narrowed due to concerns about a near-term drop. The May futures were 70 yen higher at 22,300 yen.
In after-hours trading on the weekend, Chicago’s sharp rise lifted nearby corn to the 22,400 yen range. While corn was showing reluctance to fall over the weekend, there was excessive reaction to the upside. With Chicago closed on Monday, Tokyo’s Monday trading was expected to be in a narrow range with thin activity, but actually the near month traded around the 22,400 yen level in a plateau. However, due to light selling liquidity, purchases were somewhat forced. After showing a high of 22,470 yen, the market faced a cautious weather forecast for the US Corn Belt, causing gains to narrow. A drop in Chicago corn is anticipated after the holidays.

(Tokyo U.S. soybeans)
Tokyo soybeans continued to react mildly to Chicago’s continued sharp decline. The April futures were 70 yen lower at 46,230 yen.
Chicago’s falls intensified, but Tokyo’s reaction remained muted. Chicago’s ongoing declines below 46,000 yen are not an issue, but the recent downturn may now be more fully felt. The near-month futures fell, making the nearby months even more overvalued. For now, await the reopening of Chicago soybeans tomorrow.
https://www.fujitomi.co.jp/?p=15520