TOCOM ends higher on Shanghai recovery, firm oil prices

Benchmark Tokyo rubber futures reversed losses to end higher on Monday, on a recovery in Shanghai futures and stronger oil prices, which hit their highest since November 2014.

Key crude oil prices rose by 1 percent to their highest levels since late-2014 on Monday, pushed up by a deepening economic crisis in Venezuela and a looming decision on whether the United States will re-impose sanctions against Iran.

The Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery finished 1.5 yen higher at 193.5 yen ($1.77) per kg. Earlier in the session, it hit a low of 188.9 yen.

“External factors such as Shanghai futures’ gain and strong oil prices helped the TOCOM bounce back,” said Toshitaka Tazawa, an analyst with commodities broker Fujitomi Co.

The most-active rubber contract on the Shanghai futures exchange for September delivery rose 140 yuan to finish at 11,765 yuan ($1,849) per tonne, rebounding from a low of 11,510 yuan.

“However, there is technical resistance at just above 195 yen and it may be difficult for the Tokyo rubber to crack the levels as a further rally in oil prices would be the only supporting element,” he said.

The TOCOM benchmark, which sets the tone for rubber prices in Southeast Asia, has tried and failed to break the 196 yen mark in February and March amid concerns over rising stock.

Rubber inventories at TOCOM-approved warehouses JRU-WRHSTX-TOT increased to 13,792 tonnes, as of April 20, up 134 tonnes from April 10, and nearly 11-fold from a year earlier, according to TOCOM data.

The front-month rubber contract on Singapore’s SICOM exchange for June delivery last traded at 144.5 U.S. cents per kg, up 1.6 cents.

($1 = 6.3616 Chinese yuan)