Global benchmark Tokyo rubber futures may rebound from recent 5-year lows this week but could also resume the downtrend on pressure from ample supply and the sale of Thailand's stockpile, industry sources said on Monday.
Among other soft commodities, Thai raw sugar discounts could narrow after New York futures plunged to four-year lows, while Vietnamese robusta prices may fall further ahead of the next crop season. Cocoa butter could stay at current levels before year-end demand picks up again.
Markets in Japan were closed on Monday for a holiday. The most active rubber contract on Tokyo Commodity Exchange rose 2.3 yen to settle at 190.2 yen a kg on Friday, having plunged to a five-year low of 186.3 yen last week.
TOCOM rubber may hover above a support at 185.30 yen for a few days or rebound moderately to 196.70 yen before breaking the support level, according to Reuters market analyst Wang Tao.
The contract will fall further towards 166.90 yen over the next four weeks, he added.
Tokyo futures have fallen more than 30 percent so far this year, hurt by worries about China's economy and recently by Thailand's decision to sell the country's 200,000-tonne rubber stockpile.
"There's no change in terms of poor demand outlook. We learn that top consumer China has been getting cheap rubber from Vietnam, Myanmar and Laos and Cambodia through border trade," said Edy Irwansyah, executive secretary of the North Sumatran branch of the Indonesian Rubber Association.
"Production in those countries is increasing and so is smuggling. That's what we heard."
In the sugar market, early indications showed Thai high polarisation raw sugar was offered at 20 points below New York futures from 35 points last week. But the improvement was mainly driven by a drop in New York as differentials and futures usually move in opposite directions.
"Raw sugar prices have been savaged over the past few weeks, with a complete capitulation last week, and maybe more to come," said research and analysis firm Green Pool Commodities.
"What initially was a reversal of a large fund long to short seems now to have been enjoined by substantial trade and producer selling."
ICE raw sugar sank to a more-than-four-year low in heavy trade on Friday, extending a rout on plentiful near-term supplies as Brazil harvests a big crop and global inventories swell.
