Tokyo rubber futures edge lower

Tokyo rubber futures closed mostly lower on Monday as weak technical signals lead to selling on rallies, but the market was supported by growing supply concerns after last week's drop in Japanese inventories.
Rubber prices in producing countries, including the world's top producer Thailand, stayed near their highs due to robust demand for physical rubber from China and tyre makers. "It's a tug-of-war between strong demand and weak technical," said a senior trader at a Japanese trading house. "But as long as demand for physical rubber is strong, rubber prices in general will be supported."
Fundamentals for rubber remain bullish but weak technical in Tokyo Commodity Exchange rubber futures and a downtrend in other commodities made traders wary of chasing prices higher.
"Rubber turned solid again as fears over supplies increased after last week's rubber stocks data," said Hisaaki Tasaki, a market analyst at Ace Koeki Co Ltd "Domestic stocks usually start falling around this time of the year, but the market is still concerned about the falling volume in physical natural rubber supplies."
Key November TOCOM rubber closed at 301.6 yen a kg, down 0.9 yen or 0.3 percent from Friday's close. It had moved in a range of 298.5 to 303.8 yen. The spot June rubber contract expired at 315.5 yen per kg, with 506 lots or 2,530 tonnes of deliveries.
That was a record high expiry price at the exchange. Key November rubber faced technical resistance at the 14-day moving average of 303.1 yen. Traders said heavy sell orders were lined up around 309 yen.
That level is important as the key contract has not climbed back there since a major technical gap was created when the key contract dropped from 309.1 yen, the level hit on June 13, to around 301.1 yen the following day.
The benchmark TOCOM rubber contract climbed back as far as 306.1 yen on Friday. Still, the market was wary about selling TOCOM rubber heavily after seeing inventories drop sharply last week.
Data from the Rubber Trade Association of Japan showed last week crude rubber stocks held at private Japanese warehouses fell about 8.7 percent to 15,910 tonnes as of June 10 from 17,418 tonnes on May 31. Thailand's benchmark RSS3 rubber sheet for August shipment was little changed around $2.75 a kg free on board (FOB) from Friday's level.