Tokyo rubber futures gain

Tokyo rubber futures rose almost two percent on Wednesday as firmness in other commodities such as crude oil induced short-covering, and after contracts held above a closely watched technical level.
The strength in cash rubber prices due to concerns over supplies due to heavy rains in key producing areas continued to lend support, but Tokyo players were not optimistic about the long-term outlook of the market.
"Today's rebound was mainly caused by firmness in other markets, including precious metals and energy, but it's to say that the trend has turned strong again," said Takashi Ogura, manager at Kanetsu Asset Management. "The spot price has been supported in recent weeks, but the distant-end of the market is still under strong profit-taking pressure," Ogura said.
The benchmark rubber contract on the Tokyo Commodity Exchange for October delivery closed trade at a session high of 278.7 yen per kg, up 4.9 yen or 1.8 percent from 273.8 yen on Tuesday.
Other contracts were 3.8 yen to 5.1 yen higher, with the spot May contract up 4.0 yen at 274.0 yen. TOCOM prices regained strength after seeing the key contract finish above the 100-day moving average the previous day.
Still, underlying sentiment was bearish following heavy sales over the past week. The key contract managed to break through the seven-day moving average of 277.7 yen on Wednesday, but traders were watching whether it could hold above the level until the close. Another tough technical resistance is seen at the 14-day moving average of 278.9 yen. In energy markets, US crude oil futures fell on Wednesday but held above $63 a barrel.
On Tuesday, they rallied to a 10-day high above $63 due to unrest in Nigeria the world's eighth-largest crude exporter. Higher oil prices tend to encourage a shift in demand to natural rubber from synthetic rubber, a petrochemical product.
The benchmark TOCOM gold contract for April 2008 closed the session up 10 yen or 0.4 percent at 2,627 yen a gram. Cash rubber prices advanced on Wednesday in line with gains in the Japanese futures market. Cash prices were buoyed by fears that rains in Thailand and Malaysia, the world's first and third-largest producers respectively, would disrupt tapping and cause supply shortages, traders said.