Tokyo rubber futures slipped on Wednesday, after hitting a one-week high a day, as the oil market took a breather from a record-breaking rally and on caution about the yen's strength against the dollar, brokers said.
The benchmark April 2005 rubber contract on the Tokyo Commodity Exchange (TOCOM) closed down 1.7 yen per kg at the day's low of 143.3, retreating from the high of 144.3.
Other months lost 0.4 to 1.9 yen. "Activity was dominated by long liquidation amid a lack of fresh positive incentives," a Tokyo broker said.
The April contract may drop further to around 141 yen in the short-term, as the market is vulnerable to long liquidation after jumping to a one-week high on Tuesday in reaction to the upbeat expiry of the spot October contract, he added.
The April contract rose as far as 145.7 yen on Tuesday, the highest for TOCOM's benchmark rubber since October 19, as smaller-than-expected deliveries at Monday's spot expiry wiped out oversupply concerns among TOCOM participants.
On October 14, TOCOM's benchmark rubber hit a 3-1/2 month high at 147.9 yen, as soaring oil prices spurred speculative buying.
Rising crude oil prices have mostly been interpreted as a bullish factor for TOCOM rubber as more expensive crude could shift demand from synthetic rubber, a petroleum product, to natural rubber.
Currency dealers said that worries about mixed US economic data, presidential election uncertainty and a wide and growing current account deficit would keep the dollar on the back foot.
The volume of TOCOM rubber traded on Wednesday was an estimated 3,810 lots, down from Tuesday's 4,552 lots. Open interest stood at 27,229 lots at the end of Tuesday trade, up from Monday's 26,273 lots.
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