TOCOM hits 5-mth low as near-month contract tumbles

Benchmark Tokyo rubber futures hit a five-month closing low on Tuesday, ending 1.7% lower, as it came under pressure from heavy selling in the nearest-month contract.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, erased early gains in part after the bourse urged investors with open positions in April rubber futures to settle contracts well before expiry on April 24.

Exchange inventories are sitting at a level low enough to pose a risk of sudden price swings.

The Tokyo Commodity Exchange rubber contract for September delivery finished 3.6 yen lower at 212.9 yen (US$1.95) per kg, its lowest close since Nov 18.

It earlier touched 211.5 yen, the lowest intraday level since Nov 21.

"The nearest-month contract is down so much, putting pressure on the overall complex, with unwinding of positions ahead of the expiry of the contract for April delivery," said a source with a Tokyo-based broker.

Natural rubber stocks at TOCOM-approved warehouses have slipped to their lowest in more than six years after Thai floods in January cut output and as higher prices in China lured supplies out of Japan.

The most-active rubber contract on the Shanghai futures exchange for September delivery fell 340 yuan to finish at 14,610 yuan (US$2,121) per tonne, after touching the lowest since Sept. 30 earlier.

The front-month rubber contract on Singapore's SICOM exchange for May delivery last traded at 155.80 US cents per kg, down 4.5 US cents.