Tokyo rubber futures dropped to their lowest level since late July on Friday as a steady decline in oil prices prompted technical sales, but fund operators unwinding positions helped the contracts regain some ground. Sales were also triggered after the yen strengthened in the hammering down the benchmark April rubber contract to as low as 134.1 yen per kg the lowest since July 26, traders said.
But the key contract bounced back as fund operators who were holding heavy short positions locked in profits around the low, they said.
"Weak oil prices and the yen's strength put pressure on rubber, but falls were limited by fund operators' short-covering," said a trader at a Japanese commodities house. The benchmark April rubber contract on the Tokyo Commodity Exchange fell 1.4 yen per kg at 135.1 yen.
Other contracts closed down 1.0 to 1.9 yen.
The yen had firmed to around 106 yen against the dollar compared with the late US level of 106.63 yen. The Japanese currency advanced despite weaker-than-expected third-quarter growth figures for Japan as market worries persisted about the huge twin US deficits.
Benchmark Nymex crude oil stood around $47.45, well back of the record high of $55.67 recorded on October 25.
On Friday's turnover in TOCOM rubber was the highest so far this month, which intensified views that fund operators had bought back heavily. Volume totalled 9,666 contracts compared with 4,298 lots on Thursday.
"Rubber's falls could be limited from the present level but I'm not sure whether fund operators will unwind their positions completely," the trader said. "If they cover their positions further, rubber could head back towards 140 yen next week."
Market bears were still sceptical about the outlook given weak technical trends and a lack of distinct buying factors for the market, traders said.
High domestic inventory levels undermined the prompt November contract and also pressured distant contracts. The November contract closed at 132.9 yen, down 1.2 yen from Thursday's close.
Open interest jumped to 34,909 contracts at the end of Friday compared with Thursday's 32,209.
Comments
Comments are closed.