TOCOM up for 5th session, hits 1-wk high on firmer Shanghai

Benchmark Tokyo rubber futures rose for a fifth straight session on Monday, hitting a one-week high, helped by stronger Shanghai futures and a surge in the nearest-term contract ahead of expiration next week.

The Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery finished 4.9 yen, or 2.3%, higher at 219.4 yen (US$1.93) per kg, after touching the highest since May 8 of 220.4 yen earlier in the session.

"The TOCOM's May contract led the way," said Toshitaka Tazawa, analyst at Fujitomi Co.

"Investors with open positions in May rubber futures rushed to make balance settlement, which helped buoy prices in other months' contracts," he said.

The May contract, which is due to expire on May 25, surged 6.4 yen to end at 284.9 yen per kg.

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.

As of the latest stocks report, rubber inventories at TOCOM warehouses as of April 30 stood at 1,247 tonnes, down 85% from a year earlier and the lowest since July 2010.

In late March, the TOCOM urged any investors with open positions in April rubber futures to settle contracts well before expiration on April 24, with exchange inventories sitting at a level low enough to pose a risk of sudden price swings.

The most-active rubber contract on the Shanghai futures exchange for September delivery rose 175 yuan to finish at 13,715 yuan (US$1,989) per tonne, rebounding from an eight-month low hit in the middle of last week.

Global natural rubber output in 2017 is seen rising 5.7% as tapping activity is expected to pick up in key producing countries such as Thailand, Vietnam and India, the Association of Natural Rubber Producing Countries (ANRPC) said last week.

"The prediction was supposed to weigh on rubber prices, but that did not happen due to tight inventories at the TOCOM warehouses," Tazawa said.

The front-month rubber contract on Singapore's SICOM exchange for June delivery last traded at 151.2 US cents per kg, up 2.6 US cent.

(US$1 = 113.4600 yen)

(US$1 = 6.8955 Chinese yuan renminbi)