Tokyo rubber futures ended lower on Tuesday as players took profit a day after the benchmark hit a three-week high. The February contract on the Tokyo Commodity Exchange fell 2.4 yen, or one percent, to settle at 248.6 yen ($2.15) per kg.
On Monday, the February contract peaked at 252.8 yen, the highest since August 9. However, TOCOM prices did not fall sharply as they were still supported by rising oil prices, dealers said. US crude futures were little changed in electronic trade on Tuesday, hovering above $74 a barrel as the market kept track of the path of a potentially destructive hurricane. Expensive oil prices usually benefit TOCOM as it encourages the use of natural rubber instead of petrochemical-based synthetic rubber.
TOCOM contracts were expected to be traded in a narrow range with 245.9 yen, the seven-day moving average, seen as a strong support level, while the upside should be capped at around 252 yen, dealers said. In the physical market, falling supply meant rubber prices were little changed despite the drop on TOCOM.
Physical prices were likely to remain firm this week as rain persisted in parts of top producer Thailand, as well as Malaysia, while wintering was underway in the southern part of Indonesia's Sumatra Island.
Trading was active with China, the world's biggest rubber buyer, bidding for Indonesia SIR20 and Thai STR20 for prompt shipment, but only few exporters could supply them, traders said.