Tokyo rubber down

Key Tokyo rubber futures fell more than 2 percent on Thursday as a firmer yen shaved earlier gains chalked up on seasonal supply concerns, although it still managed to finish above 140 yen. The key Tokyo Commodity Exchange rubber contract for July delivery, which debuted on Tuesday, ended at 142.3 yen, down 3.4 yen or 2.3 percent, after earlier rising as high as 149.6 yen.
The day's trough was 141.2 yen. "The fact that the dollar weakened to below 90 yen caused rubber to give up gains today," a Tokyo-based broker said. The dollar slipped 0.4 percent to 89.86 yen, retreating from a one-week high of 90.79 yen hit on trading platform EBS on Wednesday following a Fed decision to keep interest rates near zero on Wednesday after a two-day policy meeting.
The market is drawing some support from the start of the wintering dry season when latex output falls in the key producing countries, as well as moves by the world's top three rubber producers to cut exports in a bid to prop up prices. At the same time, slack demand from the auto industry due to the deepening global recession will likely moderate price rises, traders said.
The US House of Representatives cleared an $825 billion economic stimulus package on Wednesday and the Senate is expected to begin debating it within days. US crude slipped below $42 a barrel on Thursday as views that demand for fuel could falter outweighed US data showing falling gasoline and distillate stocks in the world's top energy consumer.
The physical market was little changed in subdued trading as China, the largest rubber consumer, marks the Lunar New Year holiday. "The market will be quiet until next week when Chinese players return in full force, and we can see how consumers react to current market levels," said a trader in Thailand.
"The market looks supportive, as consumers should be able to buy at current levels. At the same time, some may still be waiting for prices to fall before buying," the trader said. Amid an estimated 25 percent drop in the global car market in January, Volkswagen's vehicle sales fell by only 15 percent, VW's chief executive told the Financial Times.