TOCOM extends gains as yen turns weaker on day

Benchmark Tokyo rubber futures erased early losses and rose for a second straight session on Thursday, as the yen turned weaker against the dollar during the session.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, hit a seven-year low on Tuesday, but have since recovered nearly 9% helped by a Thai measure to buy rubber to support farmers.

The Tokyo Commodity Exchange rubber contract for June delivery finished 2.3 yen higher at 157.3 yen per kg, after falling more than 2% in early morning trade. It touched an intraday peak of 157.5 yen, the highest since Jan 4.

The U.S. dollar was quoted around 117.86 yen, gaining around 50 cents from the morning. It had closed around 118.23 yen on Wednesday afternoon.

"The Japanese yen's weakening by about 0.5 yen against the dollar (during the day) has helped boost TOCOM," said a source with a Tokyo-based broker. "Meanwhile, it is still uncertain how much impact the Thai government's plan would have on rubber futures, amid this high supply season."

Thailand's government will buy 100,000 tonnes of rubber initially from farmers at 45 baht ($1.24) per kilo, the deputy prime minister said on Thursday, well below the level demanded by farmers threatening to protest.

Crude rubber inventories at Japanese ports stood at 10,229 tonnes as of Dec 31, up 4.7% from the last inventory date and the highest level since Nov 10, data from the Rubber Trade Association of Japan showed on Thursday.

The most active rubber contract on the Shanghai futures exchange for May delivery rose 60 yuan to finish at 9,885 yuan per tonne.

The front-month rubber contract on Singapore's SICOM exchange for February delivery last traded at 108.50 U.S. cents per kg, up 0.5 cent.