Key Tokyo rubber futures fell on Wednesday as investors became wary of recent sharp price increases, although a recovery in oil prices lent some support to the market. The key Tokyo Commodity Exchange rubber contract for September delivery settled at 450.4 yen per kg, down 8.7 yen or 1.9 percent.
The contract fell as low as 438.2 yen, down 20.9 yen or 4.6 percent, before recovering on the back of rising oil prices. TOCOM rubber futures also recouped some of their earlier losses as Shanghai rubber futures trimmed losses and closed slightly higher while the yen retreated against the dollar. The most active Shanghai rubber contract for September delivery inched up 100 yuan to close at 36,555 yuan ($5,589) per tonne on Wednesday. Volume rose to 696,270 lots from Tuesday's 495,298 lots.
Financial markets in top rubber producer Thailand are closed for the Songkran festival holidays from Wednesday to Friday. Demand for rubber from Japanese users is expected to remain sluggish, as the government has downgraded its assessment of the economy for the first time in six months to reflect last month's devastating earthquake and tsunami. Wholesale prices rose at the fastest pace in over two years in an ominous sign for company profit margins.