Tokyo rubber down as higher yen spurs sales

Tokyo rubber futures settled lower in thin trade on Wednesday as the yen's firmness against the dollar-induced profit taking, brokers said.

The benchmark November contract, which was listed on the Tokyo Commodity Exchange (TOCOM) on Wednesday, closed at the day's low of 153.1 yen per kg, slipping from a high of 156.3.

"Activity was subdued as most operators were reluctant to take new positions due to a lack of fresh incentives," one broker said. "I expect the benchmark contract to trade within the 150-155 yen range in the short-term."

The spot June contract ended down 1.8 yen at 155.8, with the remaining months losing 3.4 to 4.9 yen. The market has gone into backwardation since last week given tightness of physical supplies.

Latest data from the Rubber Trade Association of Japan showed crude rubber stocks at major private Japanese warehouses fell to 17,060 tonnes as of May 10 from 18,126 tonnes on April 30.

Brokers said Japanese rubber stocks could fall further later this month, as part of the rubber delivered at TOCOM spot expiry on Tuesday may be shipped to China, where demand is strong.

TOCOM said on Tuesday that the spot May rubber contract expired at 158.0 yen per kg with 300 lots or 3,000 tonnes of rubber deliveries. Turnover in TOCOM rubber was estimated at 7,308 contracts on Wednesday, against on Tuesday's 7,304 lots and the daily average for May of 7,482 lots.

Open interest was 33,418 lots at the end of Tuesday trade, down from 34,784 lots on Monday and 35,176 lots a week ago. The dollar was at 111.47/49 yen.

It has fallen on worries that climbing oil prices would hurt the US economy and make the Federal Reserve less likely to raise interest rates.