Most Tokyo rubber futures contracts settled firmer on Monday on buying inspired by a weaker yen, although the benchmark contract was shy of testing the upside as a rally in the oil market took a breather, brokers said.
The benchmark March 2005 contract on the Tokyo Commodity Exchange (TOCOM) ended at the day's low of 143.9 yen per kg, unchanged from Friday's close but slipping from Monday's high of 144.9.
Other months were 0.1 yen down to 0.9 yen up. "The market was under profit-taking pressure. But underlying sentiment remained firm on the back of a bullish energy market and strength in other commodities futures," a Tokyo broker said.
TOCOM's benchmark rubber hit a seven-week high of 145.7 yen last on Tuesday, regaining 10.7 yen or 7.9 percent from the September bottom of 135.0 yen. Rubber futures had bounced back as soaring oil prices bolstered expectations for shift in demand to natural rubber from expensive synthetic rubber, a petrochemical product.
Oil prices slipped slightly on Monday after a threat to Nigerian crude flows receded, but lingering concerns of a possible severe disruption to supplies ahead of winter held the market close to $50 a barrel.
TOCOM's benchmark rubber will likely test key resistance at 145.7 yen this week, depending on movements of the oil and currency markets, the broker said, adding that a next target is seen at 150 yen.
Brokers are also focusing on whether Chinese traders will return to the rubber market with large lots of buy orders after a weeklong National Day holidays end on October 7.
In the currency market, the dollar rose as high as 110.93 yen on Monday from 110.52 in late New York trade, after financial chiefs from the Group of Seven industrial nations did not push China to revalue the yuan, easing pressure on the dollar against Asian currencies.
Rubber futures are yen-denominated, and buying is often spurred by a fall in the Japanese currency. The volume of TOCOM rubber traded on Monday was an estimated at 8,142 lots, up from Friday's 5,420 lots.
Open interest stood at 29,337 lots at the end of Friday trade, down from Thursday's 29,956 lots.