Tokyo rubber futures briefly jumped 3 percent to touch a five-month high before paring gains on Monday as funds bought on positive technical signals helped push the benchmark contract near the key 180 yen mark. The dry wintering season, when latex output falls, was also providing psychological support for rubber prices, traders said.
They expect the benchmark rubber contract on the Tokyo Commodity Exchange to challenge 180 yen, although many doubt it will be able to hold above that level in the absence of strong fundamentals. Wintering normally runs from late January until April in Thailand, the worlds top rubber producer.
"Prices are often higher for the nearby months during this period reflecting supply tightness," a Tokyo-based trader said. "The fact that we arent seeing that now means supplies are not so tight, but as its still the wintering season, this is providing prices with psychological support," he said.
The key Tokyo Commodity Exchange rubber contract for September delivery closed at 178.2 yen per kg, up 3.9 yen or 2.2 percent from Fridays close. It earlier hit a peak of 179.7 yen, the highest since November 12. Oil slipped below $52 a barrel on Monday after the International Energy Agency cut its forecast for oil demand, overshadowing data showing Chinese crude imports rose to their second-highest ever.
The Nikkei stock average fell 0.4 percent in see-saw trade, weighed down by defensive stocks, while automakers such as Toyota Motor gained on growing optimism about the health of the global economy. The dollar edged up against the yen in quiet trade on Monday with many overseas players still away for the Easter holiday.
The Thai government called a holiday for Friday due to the political unrest in the country, while financial markets in Singapore and Indonesia were closed that day for Easter. Markets in Thailand will be closed April 13-15 for the Songkran Festival. Global natural rubber output will fall 2.2 percent to 8.9 million tonnes in 2009, its biggest drop in 16 years, as Thailand, Indonesia and Malaysia produce less, the Association of Natural Rubber Producing Countries said on Monday.