TOKYO, Oct 4 (Reuters) – Benchmark Tokyo rubber futures gained on Tuesday, supported by a fall in the yen against the U.S.dollar, but trade was thin as Chinese markets remained shut for National Day holidays.
“The softer yen prompted fresh buys but gains were limited as traders in the world’s biggest rubber buyer were away,” said a Tokyo-based dealer who requested anonymity. The dollar climbed 0.8 percent to hit a 13-day high of 102.495 yen on Tuesday JPY= as an upbeat survey of the U.S. manufacturing sector drove investors to increase their bets on a rise in the U.S.interest rates by the end of the year.
A weaker yen makes yen-denominated assets more affordable when purchased in other currencies. The Tokyo Commodity Exchange (TOCOM) rubber contract for March delivery JRUc6 0#2JRU: finished up 2.6 yen, or 1.6 percent, at 166.0 yen ($1.62) per kg. Crude rubber inventories at Japanese ports stood at 7,794 tonnes as of Sept.
10, down 1.5 percent from the last inventory date, data from the Rubber Trade Association of Japan showed on Tuesday. “I think the market will gradually rise on supply concerns as the long slump in prices have discouraged farmers in Thailand to produce high-quality materials,” the dealer said.
“But that won’t happen so quickly, at least until Chinese investors are back in the market next week,” he added. The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, hit a four-month high of 170.9 yen late last month, but have fallen since then on profit-booking. On the downside, oil prices fell nearly one percent on Tuesday on news that Iran and Libya have continued to increase production, overshadowing an OPEC agreement struck last week to freeze output levels in a bid to stem a two-year price rout.
O/R The front-month rubber contract on Singapore’s SICOM exchange for November delivery STFc1 last traded at 138.7 U.S. cents per kg, up 2.6 cent.
($1 = 102.3800 yen)
(Reporting by Yuka Obayashi; Editing by Sherry Jacob-Phillips)