Based on an analysis of the Tokyo Commodity Exchange (TOCOM) rubber prices, Jupiter Securities chief market strategist Benny Lee(filepic) said this was supported by expectations of crude oil prices heading towards US$60 and the US dollar weakening against the Japanese yen, among other factors.
KUALA LUMPUR: Rubber prices are seen heading upwards until 2018, with the recent steady increase in prices this year indicating that traders are willing to buy at higher prices following a long bearish trend since 2011.
Based on an analysis of the Tokyo Commodity Exchange (TOCOM) rubber prices, Jupiter Securities chief market strategist Benny Lee said this was supported by expectations of crude oil prices heading towards US$60 and the US dollar weakening against the Japanese yen, among other factors.
Malaysian srubber prices generally track the price trends seen in TOCOM rubber prices. Speaking at the Global Rubber Conference here, Lee noted that rubber prices had seen a good run-up at the end of 2016, hitting close to 350 yen per kilogramme.
This price level, however, was not sustainable, as it quickly moved back below 200 yen.
“We saw a breakout from the downtrend as prices shot up, and while it came back down, it did not go back to the lows of 150 yen seen previously.
“It found a new support at 180 yen before rebounding and now trades at about 226 yen,” he said.
Lee said there were indications of a bullish trend developing over the past two months, with traders willing to buy at higher prices.
The next question, he said, was whether prices could go back up to 350 yen.
While there is a low chance of the market testing the price highs seen at the end of 2016, Lee said the more realistic target price for TOCOM at the end of 2017 was 278 yen.
He added that rubber prices could move towards 330 yen or even beyond this level in 2018. “Malaysian rubber prices are expected to follow this upward trend,” he said.
He forecasts an average price of 240 yen for 2017 and 275 yen in 2018.
