Tokyo rubber futures were mostly softer on Wednesday, reflecting weak crude oil prices, although they recouped some of their early losses with the key contract edging above 180 yen. Physical rubber prices were mostly steady, however, drawing strength from supply tightness due to rain in major producing countries such as Thailand, the world's largest.
Traders said the rainy season was likely to run its usual course until late November. "(We) expect the rain to be over by December then I think we will see supplies pick up," a trader in Thailand said.
The key Tokyo Commodity Exchange rubber contract for April delivery closed the morning at 181.1 yen a kg, down 0.7 yen or 0.4 percent, recovering from a session low of 173.8 yen. Funds have fled from TOCOM rubber as the deterioration in the global economy has hit demand for vehicles, which is likely to mean less consumption of the industrial commodity mainly used to produce tyres.
Barring strong positive news for the economy, traders say TOCOM rubber will likely trade between 160 yen and 200 yen, the band that it has largely been locked in since mid-October. US crude futures continued to slide after falling 5 percent on Tuesday as the deepening global economic crisis raised expectations of further slowdowns in energy demand. They were trading at $58.79 a barrel versus the settlement of $59.33.
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