Tokyo rubber prices edged lower on Friday after failing to break their latest high as other commodity prices fell, traders said. The benchmark distant November TOCOM rubber contract closed at 313.5 yen per kg, down from 314.8 yen on Thursday It fell more than 1 percent in the session, dragged down by falls in other commodities, including gold, which dropped more than 2 percent.
"Rubber was dragged down by other commodities," said Shoji Sugata, assistant manager at Mitsubishi Corp Futures and Securities Ltd. The key most distant November rubber contract on the Tokyo Commodity Exchange was trading at 310.8 yen a kg, down 4.0 yen, or 1.27 percent, from Thursday's close at 314.8 yen.
On Thursday, the November contract climbed as high as 317.0 yen the highest since May 30, when it rose to 319.6 yen, the highest for a benchmark since September 1980. Despite the charts not looking good, technical sentiment was still healthy, with the key TOCOM contract holding above the 7-day moving average of 306.4 yen and the 14-day MA of 304.4 yen.
Traders said TOCOM rubber could rebound to test highs in the near term, as the market was still concerned about tight supply in Thailand, the world's leading producer. Rain in Thailand was fading and supplies were expected to improve gradually, but demand had also increased, traders said.
"There was rain in some parts of Thailand's Deep South," said a farmer in Pattern, one of three southern Muslim-majority provinces where more than 1,300 people have been killed in separatist violence since January 2004.
"Supply should be back to normal in July," a Singapore based rubber trader said. Other traders said the continuing bullishness in oil prices should help rubber prices rise as higher oil prices tend to stimulate a shift in demand to natural rubber from synthetic rubber, a petrochemical product.
On the physical front, trading in Thailand was very thin as most businesses were closed for the celebrations of the 60th anniversary of King Bhumbibol Adulyadej's accession to the throne. The benchmark RSS3 rubber sheet for July shipment was at $2.80 per kg, little changed from $2.79 baht on Thursday.
Indonesia's SIR20 was quoted at $2.31 per kg, down slightly from Thursday's $2.33 as buyers were reluctant to buy at high prices, traders said. "It's possible that buyers would hold back their orders. Right now they wait and see what will happen to prices after TOCOM's corrections," a trader in Indonesia said.