Japanese rubber futures fell for the third consecutive day on Wednesday on fund selling, dragging down the price of tyre-grade in Southeast Asia. Indonesia noted some deals for SIR20 but dealers said weak sentiment on the Tokyo Commodity Exchange put pressure on physical prices in producing countries.
The new benchmark January 2007 contract on TOCOM rubber futures, which debuted on Wednesday ended at 266.2 yen a kg ($2.28) after opening at 267.5 yen. The previous benchmark, December, fell more than 2 percent to close at 264.1 yen, down 6.6 yen from Tuesday's close.
"Supply is okay now in Thailand and Malaysia, so people are getting panicky and decide to sell," said a dealer in Thailand's northern city of Hat Yai. "Supply keeps building up and producers seem to have problems with the cash flow. They need to sell rubber. People can't carry stocks too much," he said.
Dealers said many investors ditched their positions on TOCOM as heavy rains subsided in Thailand and Malaysia. Wintering in Indonesia offered little help.
During the wintering season, rubber trees shed their leaves and latex output declines. "I look at 250 yen as the first strong support for TOCOM. The market can still go down more than 10 yen before it rebounds," said the dealer in Hat Yai.
Thai benchmark RSS3 rubber sheet for August shipment eased to $2.25 a kg from $2.30 a kg free on board (FOB). Tyre-grade Standard Thai Rubber, or STR20 block, for August shipment also fell to $2.25 a kg.
Malaysia's tyre-grade SMR20 dropped to $2.25 from $2.30 a kg. Indonesia's SIR20 was traded on Wednesday at 99.50 US cents per pound ($2.19 a kg) and 99.00 cents ($2.18 a kg) for August shipment FOB at Palembang port in South Sumatra. "US buyers have been saying the market should go down, and this really comes true," said a dealer in Padang, the provincial capital of West Sumatra.
SIR20 was quoted around 102 US cents per pound on Tuesday. In Shanghai, the most heavily traded October rubber contract ended 810 yuan per tonne lower at 22,925 yuan ($2,871).