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Tuesday, May 17, 2022

TOCOM rubber slides on weaker oil and Nikkei slump

TOKYO (Feb 24): Benchmark Tokyo rubber futures slid 1% on Wednesday, snapping a three-day winning streak and falling from a near three-week high that hit the previous session, as investors took profits on weaker oil prices and a slumping Nikkei stock index, dealers said.

The new Tokyo Commodity Exchange rubber contract for August delivery <0#2JRU:> finished at 154.2 yen (US$1.38) per kg, down 1.6 yen, or 1%, from an opening price of 155.8 yen.

“The benchmark TOCOM contract, which set the tone for tyre rubber prices in Southeast Asia, touched the highest since Feb 4. on Tuesday, but it came under selling pressure as risk appetite waned after a tumble in oil prices,” said Toshitaka Tazawa, analyst, Fujitomi Co.

“Lower Japanese equities and softer Shanghai rubber futures also added to the pressure,” he said.

Oil prices slid on Wednesday, extending sharp falls from the previous session after top exporter Saudi Arabia ruled out production cuts, and industry data showed a further build in US crude stockpiles.

Japanese stocks fell on Wednesday as a stronger yen weighed on exporters and oil prices extended sharp declines.

The yen, often sought by investors as a shelter when riskier assets are under pressure, hit an almost three-year high against the euro of 123.04 yen.

The most-active rubber contract on the Shanghai futures exchange for May delivery fell 85 yuan to finish at 10,585 yuan (US$1,619.74) per tonne.

“Still, the TOCOM losses were capped due to wintering season in Southeast Asia and the planned export cut by top rubber producers from March onwards,” Tazawa said.

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.

Asia’s top rubber producers agreed early this month to cut exports by 615,000 tonnes for six months from March, moving to lift prices that have tumbled amid excess supply to their lowest since the global financial crisis.

The front-month rubber contract on Singapore’s SICOM exchange for March delivery last traded at 110.1 US cents per kg, down 0.8 US cent.

(US$1 = 112.1200 yen)
(US$1 = 6.5350 Chinese yuan renminbi)

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