Tokyo rubber futures fall to 3-wk low on stronger yen, weaker shares (July 9)

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TOKYO (July 9): Benchmark Tokyo rubber futures fell to their three-week low on Wednesday amid thin trade, weighed down by a stronger yen and weaker shares, dealers said.

The benchmark rubber contract on the Tokyo Commodity Exchange (TOCOM) for December delivery lost 1.9 yen, or 0.9 percent, to settle at 202.1 yen ($1.99) per kg.

It dropped to as low as 200.7 yen, a three-week low also hit in the previous session.

“The market sentiment has become bearish since the benchmark had fallen below 210 yen on Monday. Strong yen and weaker Nikkei added pressure today,” said Satoru Yoshida, a commodity analyst with Rakuten Securities, adding that Wednesday’s trading volume was the lowest this month.

Against the yen, the dollar has fallen all the way back to levels seen before a strong jobs report last Thursday, hurt by a retreat in U.S. Treasury yields from last week’s highs.

The Nikkei share average fell to a 1-1/2-week low as the stronger yen hurt exporters, while cooler-than-expected China inflation data also soured sentiment.

Consumer inflation in China, the world’s largest rubber buyer, cooled slightly more than expected in June, pointing to lingering weakness in the economy which could prompt Beijing to launch further stimulus measures to shore up growth.

“With high rubber inventories at above 21,000 tonnes at home and weak economic indicator in China, the benchmark may test 200 yen soon,” Yoshida said.

Crude rubber inventories at Japanese ports stood at 21,205 tonnes as of June 20, data from the Rubber Trade Association of Japan showed last week.

The most-active rubber contract on the Shanghai futures exchange for September delivery declined 55 yuan to finish at 13,970 yuan ($2,300) per tonne, the first time to close below 14,000 yuan since May 16.

The front-month rubber contract on Singapore’s SICOM exchange for August delivery last traded at 167.00 U.S. cents per kg, down 0.7 cent.

($1 = 101.6300 Japanese Yen)
($1 = 6.1994 Chinese Yuan Renminbi)