Benchmark Tokyo rubber futures recovered from early lows to hit a five-month high on Monday, tracking gains in Shanghai futures amid uncertainty in the world's top rubber producer Thailand after the death of King Bhumibol Adulyadej, dealers said.
"The Tokyo market has been following Shanghai futures just like a mirror," said a Tokyo-based dealer who declined to be named.
"We assume behind the surge last week in Shanghai prices was speculation by Chinese funds that there could be turmoil in Thailand after the King's death, which may affect rubber output."
The world's longest-reigning monarch, King Bhumibol died last Thursday in a Bangkok hospital, at the age of 88.
The Tokyo Commodity Exchange (TOCOM) rubber contract for March delivery finished 0.4 yen higher at 183.7 yen ($1.79) per kg after hitting the highest since May 9 of 184.6 yen earlier in the session.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, fell to a low of 182.1 yen in early trades as investors took profits after gains of 5.5 percent last week.
The most-active rubber contract on the Shanghai futures exchange for January delivery ended down 5 yuan at 14,300 yuan ($2,144.41) per tonne, although March and April contracts jumped more than 100 yuan each. The January contract hit a more than 5-month high earlier in the session.
"But I think the rally is overdone and I expect to see an adjustment of about 20 yen soon," the dealer said.
The front-month rubber contract on Singapore's SICOM exchange for November delivery last traded at 151.0 U.S. cents per kg, down 1.7 cents.
