Tokyo rubber futures ended 1.2 percent higher on Monday on short-covering after steep falls last week, but gains were limited by profit-taking. The benchmark rubber contract on the Tokyo Commodity Exchange for November delivery settled at 286.0 yen ($2.34) per kg, up 3.3 yen, or 1.2 percent from Friday's close.
The benchmark contract rose to an intra-day high of 286.5 yen before profit-taking set in. "It's a technical rebound with some support from other commodities, but rubber sentiment was weak," a dealer said.
Still, the technical trend for TOCOM rubber remained bearish after the key contract slipped below its near-term support last week, but it has found solid technical support at the 100-day moving average of 279.7 yen. "Luckily, TOCOM prices stayed above the key support, but no one knows whether they could maintain an upward trend as they failed several times to break 300 yen," a dealer said.
TOCOM rubber was expected to rise a little further this week, boosted by speculative buying after the recent falls. But improving supply would keep pressure on prices as rain in key producing countries faded away. On the physical front, most Asian physical rubber prices were quoted a little higher on Monday, in line with the rise on TOCOM.
Trading revived, with several buyers, including China, the world's biggest rubber consumer, looking to buy due to concern that physical prices would rise after TOCOM rebounded, traders said. However, physical prices were not expected to rise significantly because worries about tight supply were easing, they said.
In Thailand, the world's biggest rubber producer, supply was improving gradually as rain faded away. "There was less rain in Thailand's south and supply should get back to normal over the next few weeks," a trader in Thailand's Hat Yai rubber centre said.