SINGAPORE: Japanese rubber futures declined on Friday, as traders took profits after recent gains and a stronger yen weighed, but the contract posted a weekly gain on persistent supply pressures from top producer Thailand.

The Osaka Exchange (OSE) rubber contract for February delivery closed down 6.1 yen, or 1.67%, at 358.9 yen ($2.54) per kg but it gained 2.6% for the week.

The January rubber contract on the Shanghai Futures Exchange (SHFE), however, rose 185 yuan, or 1.1%, to 17,025 yuan ($2,397.75) per metric ton.

“Growing concerns over supply, especially during the season of peak supply, can lead to a panic-like situation and trigger aggressive buying for inventory build ahead of the forthcoming season of lean supply, which begins by the second half of January 2025”, said Jom Jacob, chief analyst at Indian analysis firm What Next Rubber.

“This means prices are poised to remain firm, while today’s price retracement may be considered part of a major rally as traders are taking profits, and not a downtrend.”

Thailand’s meteorological agency warned of heavy rains that may cause flash flood from Sept. 13-19. This week, the market was expecting the Chinese state reserve’s rotation or selling of old rubber stockpiles, said Farah Miller, CEO of independent rubber-focused data firm Helixtap Technologies.

“However, overall raw material remained supported and Chinese demand remained strong, with most traders having bullish sentiment despite the stock rotation news.”

The dollar softened, with the yen hitting its highest level this year as investors remained on tenterhooks ahead of next week’s central bank bonanza. A stronger currency makes yen-denominated assets less affordable to overseas buyers. The front-month October rubber contract on Singapore Exchange’s SICOM platform last traded at 184.9 US cents per kg, down 0.2%.