Tokyo rubber futures settled lower on Monday pressured by lower oil prices and a firm yen, although a solid spot contract gave some support to prices. The benchmark September rubber contract on the Tokyo Commodity Exchange finished down 1.3 yen per kg at 140.9, after trading between 139.8 and 141.5. Spot April posted a small loss of 0.9 yen, while other months were 1.0 to 1.8 yen lower at the close.
"The dollar's drop below 108 yen spurred long liquidation in TOCOM rubber," a Tokyo broker said. "A sharp retreat in oil prices also undermined rubber market sentiment."
TOCOM participants have been watching the oil market's movements as a clue for direction, because higher oil prices could stimulate a shift in demand to natural rubber from synthetic rubber, which is a petrochemical product.
Oil prices extended a losing streak on Monday, with US light crude falling briefly to an eight-week low of $49.66 a barrel, as growing supplies outweighed worries of rising global demand, traders said. The dollar was at 107.66/67 yen at 0718 GMT compared with 107.80 yen in late US trade on Friday and about 108.40 yen in late Tokyo on Friday.
Turnover in TOCOM rubber remained low at 19,381 lots on Monday against 16,507 lots on Friday, as operators were reluctant to take fresh positions ahead of the spot contract expiry on Friday.
TOCOM's spot April contract was resilient on Monday, supported by a view that physical deliveries at Friday's expiry are likely to be modest, the broker said.
The contract was also underpinned by firm prices of physical rubber, supplies, of which are tight amid a dry season in producing areas in Southeast Asia, he added.
Open interest stood at 61,316 lots at the end of Friday trade, compared with Thursday's 61,031 lots.
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