TOKYO, Feb 17 (Reuters) – Benchmark Tokyo rubber futures slid on Wednesday, falling from a one-week high that hit the previous session, as investors booked profits following an overnight drop in oil prices, while slumping Tokyo equities and a higher yen added to the pressure. The Tokyo Commodity Exchange (TOCOM) rubber contract for July delivery JRUc6 0#2JRU: finished 1.4 yen, or 0.9 percent, lower at 152.6 yen ($1.34) per kg, after two days of gains. “A downturn in oil prices overnight prompted sells in early trade,” said Toshitaka Tazawa, analyst, Fujitomi Co.
Crude oil futures fell almost 4 percent overnight after hopes for an agreement among top producers to freeze output faded, but they rebounded on Wednesday on optimism that a deal between Saudi Arabia and Russia to freeze oil output at January levels, would lead to a wider pact among producers. O/R Japanese stocks fell in choppy trade on Wednesday as the yen broke from its fragile weakening trend against the U.S.dollar after a rebound in crude oil prices fizzled and revived demand for the safe-haven Japanese currency.
The dollar fell 0.3 percent to 113.74 yen JPY= , pulling away from a one-week high of 114.875 set on Tuesday. FRX/ “Rubber investors have been nervous over volatile stock prices, especially after last week’s turmoil,” said Tazawa.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, tend to move higher this time of the year due to firmer demand in China after the Lunar New Year holiday, and the dry wintering season in Southeast Asia, dealers said. “But that is not the case this year as the market has been weighed on by rout of oil and stock prices,” Tazawa said, predicting the TOCOM benchmark to stay in a narrow range centred 150 yen for a while.
Rubber is tapped year round but latex output drops during the dry wintering season, when trees shed leaves.Wintering in Thailand and Malaysia lasts from February to April.
The most-active rubber contract on the Shanghai futures exchange for May delivery SNRcv1 fell 105 yuan to finish at 10,450 yuan ($1,601.78) per tonne. The front-month rubber contract on Singapore’s SICOM exchange for March delivery STFc1 last traded at 107.4 U.S. cents per kg, down 1.8 percent.
($1 = 113.4800 yen) ($1 = 6.5240 Chinese yuan renminbi)
(Reporting by Yuka Obayashi; Editing by Sherry Jacob-Phillips)