Tokyo rubber futures extended losses on Wednesday, with the most active contract falling nearly 3 percent due to improving supplies in main producer Thailand.
The key December contract on the Tokyo Commodity Exchange hit its lowest level in two weeks at 292.4 yen per kg ($2.55) before ending at 295.4 yen, down 5.8 yen from Tuesday's close. The contract hit a three-week high at 314 yen on Monday on speculative buying driven by gains in other commodities such as gold and crude oil.
"We see more supply coming in, but some areas like Phuket are still affected by rains," said a dealer in Thailand's southern city of Hat Yai. "It looks like the funds are cutting their losses in Tokyo and there's a chance the market will slip further.
But I think there's a strong support around 280 yen," he said. The price of Thai unsmoked sheet (USS), the raw material for export-grade rubber sheet, fell to 95 baht ($2.5 a kg) from as high as 99 baht last week as more supply came onto the market.
Thailand's benchmark RSS3 rubber sheet for August shipment dropped to $2.70 a kg from Tuesday's $2.73 a kg. Tyre-grade Standard Thai Rubber or STR20 block, for August shipment fell to $2.50 a kg from $2.55 a kg.
Dealers noted some overnight deals in Indonesia, the world's second-largest producer, but overall trading was muted in Southeast Asia on Wednesday. "China seems to have disappeared today. When the market comes down, they just want to wait and see," said the dealer in Hat Yai, referring to the world's main consumer of rubber.
Indonesia's tyre-grade SIR20 for August shipment was sold late on Tuesday at 106.50 and 107.00 US cents per pound ($2.34 and $2.35 a kg) free on board at Plumbing port in South Sumatra, Begawan in North Sumatra and Surabaya in East Java.
"I heard sellers in Plumbing offered rubber at 108 cents last night but there was no trade. I guess the market is valued at between 106 and 107 cents right now," said a dealer in Jakarta. In Malaysia, SMR20 fell to $2.50 from around $2.55 a kg FOB. Shanghai rubber futures tracked losses in Tokyo. The most active September contract fell 75 yuan per tonne to end at 25,520 yuan ($3,191) per tonne.