Tokyo rubber futures slipped on Thursday, retreating from a 20-month high the previous day due to profit-taking and lower oil prices, dealers said. The benchmark rubber contract on the Tokyo Commodity Exchange for September delivery fell 4.6 yen to settle at 322.2 yen ($3.45) per kg. On Wednesday, the contract rose as high as 330.3 yen, the highest since August 2008.
"It's the time for players to take profits after prices broke above 330 yen," one dealers said, adding weaker oil prices were another negative factor that weighed on rubber prices. Oil declined for a second day on Thursday to trade below $86 as a stronger dollar and soaring US crude stockpiles took the steam out of the year's sharpest rally so far.
Weaker oil prices make tyre makers shift to a synthetic rubber based on petrochemicals, which usually drops in line with oil prices, and encourage players to sell rubber futures contracts to stop losses. TOCOM rubber was expected to rebound on Friday; tight supply on the physical market should provide support, dealers said. Benchmark Thai RSS3 was offered at $3.65 per kg, the highest ever, as supply was tight since rubber trees have stopped producing latex due to the dry weather, traders said.
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