Tokyo rubber at two-month low

Tokyo rubber futures extended losses to a fresh two-month low on Wednesday, pressured by active technical sales by fund operators as sentiment deteriorated following recent price falls below important chart levels.
The bearish trend in Tokyo Commodity Exchange rubber futures spread to prices of key rubber producing countries, including the world's top producer Thailand, as end-users withdrew their bids hoping for prices to dip further.
Key December TOCOM rubber futures have closed lower in the last three sessions.
They fell as far as 269.3 yen - the lowest for a benchmark contract since May 9 - at one point on Wednesday, down about nine percent from last week's high of 297.5 yen.
"Technicals are really poor, especially after clearly falling below 280 yen yesterday," said Takashi Ogura, a risk management section manager at Kanetsu Asset Management.
At 0609 GMT, December TOCOM rubber was trading at 273.7 yen a kg, down 0.6 yen or 0.22 percent from Tuesday's close of 274.3 yen. Its session high was 275.2 yen.
TOCOM rubber could be at the point of filling in a chart gap between 271.3 yen - the low reached on May 10 - and 267.8 yen - the high hit on May 9.
Traders said hopes of a potential rise in physical supplies forced many buyers to limit active buying, while sellers were more eager to sell given the bearish long-term price outlook.
"Buyers are very careful about building inventories. They don't want to buy as they believe prices are still very high," said a Singapore-based rubber trader. "Many buyers are calling for lower prices as the market is expecting to see more supplies in the near term," he said.
The wintering dry season continued in the southern part of Sumatra island in Indonesia, the world's second-largest producer, but that should not affect the overall supply conditions.
"It looks like the outlook for supplies is good in the key origin countries, like Thailand and Malaysia ... we are expecting to see more supplies in one to two weeks because of the good weather," said a trader from Thailand's southern city of Hat Yai.