TOKYO (May 30): Benchmark Tokyo rubber futures dropped to a 3-week low on Tuesday as investors unwound positions, especially for the nearest-month contract, but trading was thin as Chinese markets remained shut for a public holiday.
The Tokyo Commodity Exchange (TOCOM) rubber contract for November delivery finished 5.3 yen, or 2.5%, lower at 248.0 yen (US$2.24) per kg, after touching the lowest since May 9 of 205.5 yen earlier in the session.
“With an oversupply in Asia, investors have been trying to reverse the recent backwardation in Tokyo,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
The TOCOM contract for June delivery plunged 14.9 yen, or 5.7%, to 248.0 yen per kg, widening losses from the previous day’s 12.8 yen and giving up most of the gains from mid-May through last Wednesday.
Tight supply at TOCOM warehouses had supported prices of near-term contracts until last Wednesday, dealers said.
Rubber inventories at TOCOM warehouses as of May 20 stood at 1,290 tonnes, down from 1,430 tonnes on May 10 and down 85% from a year earlier, according to the exchange’s latest report.
“Though stock level at TOCOM warehouses has been low, an overall rubber supply in Japan and the rest of Asia has not been tight,” Kikukawa said, adding that the TOCOM’s unusual backwardation should be gradually corrected.
Shanghai futures markets were closed for Monday and Tuesday for a public holiday.
The front-month rubber contract on Singapore’s SICOM exchange for June delivery last traded at 152.0 US cents per kg, down 2.0 US cent.
(US$1 = 110.8300 yen)
