Tokyo rubber futures inched down to hover above 331 yen on Tuesday, on light selling triggered by a firmer yen. Traders continued to look to the crude oil market - currently down some 15 percent from a July 11 record above $147 - for direction.
"I think funds will return to the crude oil market after a cooling period, and rubber will move in tandem with crude oil," a Tokyo-based trader said. The key Tokyo Commodity Exchange rubber contract for January 2009 delivery closed the morning at 331.3 yen per kg, down 0.7 yen or 0.2 percent, after moving between 330.1 yen and 332.8 yen.
The trader said rubber prices were for the time being likely to trade within a band of 325 yen-335 yen, which he described as a comfortable range for the current market.
"Energy and other commodities are all trying to look for direction, and as far as rubber goes it is a question of whether it breaks above or below these range levels," he said. Front-month US crude for September delivery was hovering around $125 a barrel after gaining $1.47 to settle at $124.73 on Monday. The dollar was around 107.36 yen, compared to late US trading levels of 107.45/48 yen. This represents a decline from a one-month peak of 108.08 yen hit on trading platform EBS the previous day.