Tokyo rubber drops on Shanghai’s slide on May 23

Tokyo Commodity Exchange (TOCOM) futures declined on Thursday, dragged down by a sharp slide in Shanghai futures, but solid physical prices in top producer Thailand offset some losses, dealers said. The benchmark TOCOM rubber contract for October delivery edged down 0.7 yen, or 0.4%, to close at 190.8 yen ($1.73) per kg.

The most-active rubber contract on the Shanghai futures exchange for September delivery plunged 380 yuan to close at 11,720 yuan ($1,695) per tonne. TOCOM's technically specified rubber (TSR) 20 futures contract for November delivery closed 0.6% lower at 162.6 yen per kg. The front-month rubber contract on Singapore's SICOM exchange for June delivery last traded 0.5% lower at 150.8 US cents per kg.

Yunnan Natural Rubber Industry Group Co Ltd, China's biggest natural rubber producer, on Thursday said it had suspended tapping for the commodity at some plantations from last weekend due to drought and soaring temperatures in the nation's main growing area. However, the company's official said that rainfall in the last day could help alleviate the situation.

"Speculations that Yunnan Province's producers would resume tapping soon, thanks to expected rain this weekend prompted a flurry of selling in Shanghai futures," Jiong Gu, an analyst at Yutaka Shoji Co, said. "But the TOCOM didn't fall as much as Shanghai since it has not risen as much as Shanghai in the recent weeks," he said, adding that stronger physical prices in Thailand amid dryer weather and an export curb lent some support.