Tokyo rubber futures edged down on Monday as the yen's strength induced profit-taking but the market was wary of selling heavily amid a dearth of new sell factors. Major Japanese fund operators have been holding large short positions, especially in distant contracts, but there were few players willing to go short along with them. "After seeing solid buying below 120 yen a couple of times in recent weeks, the market is nervous about making more short positions," said a trader at a Japanese commodity brokerage.
The benchmark May rubber contract on the Tokyo Commodity Exchange (TOCOM) closed down 1.8 yen per kg at 125.1 yen. It had moved in a range of 124.1 to 125.8. Other months closed down by 0.4 to 1.4 yen.
Traders said the rubber market has been in a downward phase since the distant contract plunged 21 percent. The key distant contract fell to a 16-month low of 116.8 yen on November 25 after peaking at 147.9 yen in mid-October.
The contract fell below the closely watched 120 yen level again last week but met plenty of bargain-hunting demand. "Sentiment is still bearish but fund operators need more selling factors to drive down the market," the trader said.
"But besides the strong yen, there are very few fundamental factors to sell rubber aggressively from this point. Probably the dollar would need to fall below 100 yen to see fresh selling."
The dollar struggled after coming under fresh downward pressure from surprisingly weak US payroll figures on Friday. The dollar was at around 102.28/32 yen in Tokyo late on Monday after falling to a low of 101.91 yen in Asian trade.
It hit a five-year low of 101.83 on Thursday. The dollar tumbled across the board on Friday after US non-farm payrolls rose 112,000 in November, well below economists' median forecast for a rise of 180,000.
The US jobless rate was 5.4 percent, matching forecasts. Turnover in TOCOM rubber was estimated at 7,954 lots compared with 11,851 lots on Friday.
Open interest rose to 37,098 lots as of the end of Friday against 36,556 lots on Thursday.
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