TOKYO (July 10): Benchmark Tokyo rubber futures edged down on Monday as investors unwound long positions following a plunge in oil prices last Friday and on weaker Shanghai futures, dealers said.
The Japanese yen weakened against its main rivals, lurking below a four-month low against the US dollar, as investors looked to add bets playing into the divergence between rising Western government bond yields and a dovish Bank of Japan.
A weaker yen makes yen-denominated assets more affordable when purchased in other currencies.
“Rubber prices came under pressure as lower oil prices and softer Shanghai futures weighed on investors’ sentiment,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
“The fact that rubber prices could not get a boost from a fast-sliding yen underlines that the rubber market’s trend remains sluggish,” he added.
The Tokyo Commodity Exchange (TOCOM) rubber contract for December delivery finished 0.6 yen lower at 196.5 yen (US$1.7) per kg.
Oil prices recovered some losses on Monday after a 3% fall in the previous session, but markets remain under pressure from high drilling activity in the United States and ample supplies from producer club OPEC.
The most-active rubber contract on the Shanghai futures exchange for September delivery dropped 160 yuan to finish at 12,690 yuan (US$1,865) per tonne.
“As long as Shanghai struggles to move above the key 13,000 yuan mark, the TOCOM will likely stay below the 200 yen level,” Yoshida said.
The front-month rubber contract on Singapore’s SICOM exchange for August delivery last traded at 145.5 US cents per kg, down 1.2 US cents.
Rubber inventories at TOCOM warehouses as of June 30 stood at 2,804 tonnes, up from 2,251 tonnes 10 days earlier, but still far below 8,094 tonnes a year earlier, according to the exchange.
(US$1 = 114.2600 yen)
(US$1 = 6.8037 Chinese yuan)
