【Fuji-tomi】 Tokyo gold cannot cover the gains from the yen’s appreciation, retreating

（Tokyo crude oil and petroleum products）
On the 6th, Tokyo crude oil and petroleum products fell sharply, hit by both a stronger yen and a sharp drop in overseas crude oil. The front-month crude oil futures for November were 3,410 yen lower at 30,410 yen, the front-month gasoline futures for December were 8,00 yen lower at 46,590 yen, and the front-month kerosene futures for December were 9,20 yen lower at 47,640 yen.
Tokyo oil products overall fell, having been forced to drop more sharply after a brief intraday bounce; the front-month crude futures were down more than 1,000 yen around midday. WTI again dipped below $47, and with the yen strengthening, this contributed to the 1,000 yen drop in Tokyo crude. After the midday, WTI recovered to the $47 range. The morning decline in the Nikkei index reduced the yen’s decline and helped narrow the drop in the Tokyo oil market. A break below $47 for WTI has now occurred three business days in a row counting from the end of last week, signaling deteriorating supply-demand conditions. The immediate focus will be the U.S. API inventory statistics due tomorrow morning. A decrease in U.S. crude stocks had provided temporary support the previous week, but in the end it was seen as a signal for increased U.S. crude production and a selling opportunity, so this time’s market is expected to follow a similar pattern. In the afternoon, WTI was again pushed down, and the Nikkei’s drop widened, reviving the yen’s strength. The Tokyo oil market continued to sell, though the decline was not strong. After around 3 p.m., WTI rebounded sharply to 47.74 dollars, but the background remains unclear. The front-month crude futures are expected to recover to around 34,000 yen.

（Tokyo Precious Metals）
On the 6th, Tokyo gold fell sharply due to the rapid appreciation of the yen. The front-month gold for April was 9 yen lower at 4,526 yen, and the front-month platinum for April was 4 yen higher at 3,392 yen.
Tokyo gold declined sharply as the rapid yen appreciation hit directly, dropping below 4,520 yen around midday. After the yen and stocks stabilized in the early afternoon, it recovered to the 4,520 yen range, while New York gold was also gradually buying and provided support. The rapid yen rise did not elicit a strong reaction from NY gold, contributing to Tokyo gold’s price drop. Considering the important event on the 8th, maintaining a buying stance for Tokyo gold seems prudent, but further yen appreciation could limit upside more than initially expected. By around 3 p.m., NY gold showed a high of 1,289.9 dollars.

（Tokyo Rubber）
On the 6th, Tokyo rubber, especially near-term, continued to fall sharply. The front-month for November was 5.7 yen lower at 185.8 yen.
Reacting to a sharp drop in origin price offers, Tokyo sold off heavily from the night session. In the morning, the impact of Shanghai rubber’s overnight rise tempered the decline, but the rebound was limited. Meanwhile, yen appreciation and stock declines continued, worsening market conditions. With near-term futures also falling sharply, the front-month faced selling pressure and hit a new low. The production increase period makes the fall in origin price offers understandable, but the sizable drop was hard for the Tokyo market to ignore. Asian participants may have anticipated a drop in domestic sales due to BS price increases. The front-month hit a low of 182.8 yen around midday. In the early afternoon, after fears of being oversold, it rose to the upper 187s, but still favoring selling on the rebound.

（Tokyo Corn）
On the 6th, Tokyo corn fell due to the stronger yen and Chicago decline. The front-month May contract was 180 yen lower at 22,140 yen.
After the Chicago close, the crop condition report exceeded expectations, and when Chicago reopened at 9:00, it fell again. The rapid yen appreciation continued, but Tokyo showed subdued activity in the morning and did not fall further. Trading has been weak since the week’s start, raising concerns about liquidity, but the declines could not be avoided. Looking ahead to the U.S. corn belt weather, conditions remain favorable for growth, suggesting further declines in Tokyo are likely. In after-hours trading, it may test around 22,000 yen.

（Tokyo U.S. Soybeans）
On the 6th, Tokyo soybeans declined due to the strong yen. The front-month April contract was 470 yen lower at Fourth column placeholder 45,230 yen.
The front month led the decline, but selling was provoked by the rapid appreciation of the yen, dropping to exactly 45,000 yen at midday. There was some rebound due to forced short-covering, but the drop was inevitable. With the weekly reports due at the end of the week, U.S. soybean ending stocks are expected to be revised upward. The stance remains to sell on rallies.
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