Tokyo rubber futures fell to a new one-month low on Monday, amid growing concerns about demand after a US fiscal stimulus package late last week failed to ease fears of a recession.
Global stock markets remained under pressure as the Tokyo market fell more than 2 percent and neared the lowest level in more than two years marked on Friday, curbing active investment in rubber and other commodities.
The benchmark Tokyo Commodity Exchange rubber contract for June delivery fell as low as 286.5 yen per kg the lowest for any benchmark since December 12. The key June TOCOM rubber contract was trading at 288.2 yen, down 0.2 yen or 0.1 percent from Friday's close. The nearby January contract, which expires later this week, was down 0.4 yen at 274.1 yen.
But falls were limited by a recovery in oil prices. New York crude oil futures rose on Monday, nearing $91 a barrel, with prices supported by the closure of Mexico's oil export terminals due to bad weather, as well as Opec's dismissal of calls to raise output.
Higher oil prices in general discourage the use of synthetic rubber, a petroleum product. On Friday, President George W. Bush called for package of tax cuts and other measures of around $140 billion to $150 billion to shore up the US economy, battered by the subprime mortgage crisis and subsequent credit crunch. But the measures are also seen as a confirmation of how fragile the world's biggest economy currently is.
In the physical market, production of natural rubber is expected to drop as Thailand, the world's top rubber producer, and No 3 Malaysia normally enter the wintering dry season, when rubber trees produce less latex, around the end of February.
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