Tokyo rubber futures dived to a 15-month low on Wednesday as ample physical deliveries made at the spot contract expiry strengthened oversupply sentiment. The April 2005 contract on the Tokyo Commodity Exchange (TOCOM) settled down 3.4 yen per kg at 122.5, the lowest for TOCOM's benchmark rubber since August 5, 2003. The spot November contract expired at 120.4 yen unchanged from the closing price of the previous trading day but down sharply from the October expiry price of 135.9.
Deliveries at the November expiry were 175 lots or 1,750 tonnes, compared with 195 lots of deliveries in October.
"The volume of physical deliveries was relatively heavy despite the low expiry price," a Tokyo broker said, adding that delivered rubber was from a trading company, which had difficulty-finding buyers in Japan.
"The large volume of deliveries underlined poor supply/demand conditions in Japan," he said. Selling of TOCOM rubber gathered pace in the afternoon, as stop-loss orders emerged after the rubber contracts hit life-of-contract lows, the broker said.
The benchmark contract is expected to test the key 120 yen level in the short-term unless it receives support from the currency or energy markets, he said. Resistance is pegged at 130 yen.
The contract has already lost 25.4 yen or 17.2 percent from the latest peak of 147.90 yen marked on October 14.
TOCOM rubber advanced last month as a record-breaking rally in oil prices fanned speculation that demand would shift to natural rubber from synthetic rubber a petrochemical product. But the market has lost support, as the oil market has run out of steam and as the dollar has been falling rapidly.
The dollar was at 103.41/42 yen. It hit 102.70 yen last on Friday the lowest level since March 2000. The volume of TOCOM rubber traded on Wednesday was estimated at 7,135 lots, down from Monday's 8,486 lots.
TOCOM was closed on Tuesday for a national holiday. Open interest stood at 36,423 lots at the end of Monday trade, down from Friday's 37,924 lots.
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