Tokyo rubber futures slid on Wednesday as a stronger yen spurred profit-taking a day after prices hit a four-month high, but bullish oil prices remained supportive. The benchmark rubber contract on the Tokyo Commodity Exchange for March delivery fell 2.0 yen, or 0.7 percent, to settle at 279.3 yen ($2.39) per kg.
On Tuesday, the key contract hit a four-month high of 281.6 yen, bolstered by strong crude oil price and tight supplies. But the firmer yen, which rose above 117 yen to the dollar, encouraged profit taking and avoidance of risk as a stronger yen makes dollar-based rubber cheaper.
By 0645 GMT, the dollar had fallen to 116.41, from around 116.86 yen on Tuesday. However, TOCOM prices were not expected to fall significantly as they stayed above the seven-day moving average of 275.0 yen and soaring crude oil prices should provide support, dealers said.
"TOCOM prices were still supported," one said. "But there's no change on fundamental side, so players are keeping their eyes on technical factors in which oil prices play a big role." At 0646 GMT, NYMEX crude for November delivery was at $87.22 a barrel in Globex electronic trading.
Oil closed $1.48 higher at $87.61 a barrel on Tuesday after jumping to an all-time high of $88.20. Turkey intends to defy international pressure on Wednesday and parliament will grant its troops permission to enter northern Iraq to crush Kurdish rebels, although it has played down expectations of any imminent attack. In the physical market, rubber was quoted mostly unchanged despite a fall in futures contract prices on TOCOM.
Firm demand and limited supply supported physical prices and trading was likely to be busier as those waiting to buy on dips coming come back to the market, traders said. "More buyers should buy to replenish their stocks when prices drop a little after TOCOM corrections," a Malaysian trader said.
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