Rubber futures slip to two-month low

Thursday, 3 October 2013 00:00 -     - {{hitsCtrl.values.hits}}

REUTERS: Key Tokyo rubber futures fell for a fourth straight session to a two-month low on Wednesday as the yen’s gain and a sharp drop in Nikkei share prices prompted sell orders in the afternoon. Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, were battered also by fears that the partial suspension of US Government operations would dent confidence for the US economy and its currency, traders said. The benchmark TOCOM rubber contract for March delivery declined 1.7% to settle at 256.5 yen ($ 2.61) per kilogram, after trading as low as 255.9 yen, the lowest since 9 August. The contract has lost 7.6% since last Thursday. “Basically, there has been no fresh reason to buy rubber, especially as the Chinese market is closed for a long holiday,” said Toshitaka Tazawa, an analyst at Fujitomi Co. “In light trade, the combination of higher yen and slumping share price in the afternoon hurt investor sentiment, pushing rubber prices further down,” he said. The dollar fell to a one-month low against the safe-haven yen on Wednesday, as investors continued to trim long bets in the greenback amid Washington’s political deadlock on resolving budget issues. A stronger yen makes dollar-based rubber cheaper and normally encourages players to sell contracts to cut losses. The benchmark Nikkei 225 average suffered the biggest one-day loss in six weeks on Wednesday, having failed to maintain earlier gains in a choppy session, after Prime Minister Shinzo Abe’s stimulus package unveiled the previous day offered little impetus for fresh buying. Abe, riding a wave of popularity with economic policies that have begun to stir the world’s third-biggest economy out of years of lethargy, said on Tuesday that the government will raise the national sales tax to 8% in April from 5%. “The tax hike will eventually hit car sales, which is not good news for rubber. But the move was widely expected and there was little impact to the rubber market today,” Fujitomi’s Tazawa said. The Shanghai rubber market was shut on Wednesday and will remain shut until next Monday for the National Day holiday. The front-month rubber contract on Singapore’s SICOM exchange for November delivery last traded at 228.50 US cents per kilogram, or 2.00 cents lower.