Tokyo rubber futures edged up on Tuesday as the dollar came off lows against the yen and oil prices found some support, but the benchmark contract shied away from a closely watched resistance of 140 yen per kg. Investors remained reluctant to shift funds into the rubber market amid a lack of fresh fundamental factors, keeping volumes extremely light, traders said.
The benchmark April contract on the Tokyo Commodity Exchange (TOCOM) closed up 1.1 yen per kg at 139.5 yen. It moved in a range of 138.8 to 139.5 yen. Other contracts closed 0.4 to 1.2 yen higher.
"Besides light short-covering by fund operators, the market largely lacked clear direction," said a trader at a Japanese commodities house.
"Most people in the market are not expecting the key contract to move out of a range of 135-140 yen," he said.
Reflecting weak technical trends, fund operators continued to hold onto short positions, while demand from end-users was seen keeping the price solid around 135 yen, traders said.
But end-users were not in any rush to buy, having seen a high level of inventories in recent weeks.
The Rubber Trade Association of Japan said on Tuesday that crude rubber stocks at private Japanese warehouses totalled 15,185 tonnes as of October 31, down 4 percent from October 20.
Inventories broke above 15,000 tonnes on October 20 for the first time since late May.
"The current inventory level is high, which could be a factor to limit gains in the prompt contract, leading to a rise in overall pressure," said another trader at a commodities brokerage.
The rubber market is expected to seek direction from the dollar and oil prices.
A series of verbal interventions have lifted the dollar from lows against other major currencies.
As of 0803 GMT, the dollar was at 105.66/69 yen compared with 105.48 in late US trade and a seven-month low of 105.28 yen hit overnight.
Turnover in TOCOM rubber was extremely thin at 2,384 lots compared with Monday's 2,778 contracts.
Open interest climbed to 31,012 contract as of end of Monday against 30,564 contracts on Friday.
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