Tokyo rubber futures ended higher on Monday as prices of other commodities, especially oil, rose but profit taking limited gains. The benchmark rubber contract on the Tokyo Commodity Exchange for April delivery rose 1.3 yen, or 0.4 percent to settle at 303.0 yen ($2.64) per kg. It rose as high as 307.5 yen, the highest of any benchmark contract since July 4, 2006, on the back of firm oil prices.
Oil stayed near a record high of $96.24 a barrel reached last week, but the rally took a breather as easing tensions in the Middle East encouraged investors to take profits. US crude oil futures traded at $95.03 in Asia after a 2.5 percent rise on Friday as strong US economic data reigned a rally that pushed prices up more than 40 percent since August.
A rise of oil prices makes natural rubber more affordable than synthetic rubber, a petrochemical product whose prices move in line with oil prices. Cash gold held on to gains after breaking above $800 per ounce for the first time since 1980 on Friday, boosted by surging oil prices. A record low dollar and more fallout from the global credit market crisis also ignited safe-haven buying for the precious metal.
But TOCOM's gains were capped as players took profit with prices up more than 30 percent from the lowest of this year at 232.2 yen they hit on August 22. "It could be a short-term correction due to profit taking after rallies, but I still believe that TOCOM should maintain a rising trend as they finished above 300 yen," one dealer said. In the physical market, rubber prices were higher, tracking rises on TOCOM.
There were several inquiries from Tyremakers, but not many deals were done due to high prices and trade was not very active, traders said. Persistent rain in Thailand and Malaysia, key producers, was likely to keep physical prices firm this week, they said.