Benchmark Tokyo rubber futures jumped 7 percent, hitting a 17-month high and marking the biggest daily percentage gain in nearly six years, as a surge in Shanghai futures and a weaker yen prompted a flurry of buys, dealers said.
"It was crazy," said a Tokyo-based dealer who declined to be named.
"Apparently, hefty money from Chinese speculators flew into Shanghai rubber futures, which helped boost Tokyo prices," he said.
The Tokyo Commodity Exchange rubber contract for April delivery finished 14.6 yen, or 7 percent, higher at 224.1 yen ($2.02) per kg, their biggest percentage leap since March 2011. It touched the highest since June 2015, of 224.4 yen earlier in the session.
The most-active rubber contract on the Shanghai futures exchange for January delivery surged 965 yuan to finish at 17,130 yuan (about $2,484) per tonne, the highest since June 2015.
On the upside, the dollar rose against the yen to 111.180 yen, its highest since late May, as investors stuck with bets that President-elect Donald Trump's administration would adopt expansionary fiscal policies that will lead to higher interest rises.
A weaker yen makes yen-denominated assets more affordable when purchased in other currencies.
"I suspect rubber has become a target of Chinese speculators after Chinese authorities have tightened regulations over trades of other commodities such as coal, coke and base metals," the dealer said, adding that computer-based trades through some foreign financial institutions bolstered volatility.
Toshitaka Tazawa, analyst at Fujitomi Co, also said speculative buying was behind the rally.
"It's hard to tell what has really buoyed the TOCOM prices since there has been no fresh fundamental news on supply and demand," he said.
The front-month rubber contract on Singapore's SICOM exchange for December delivery last traded at 173.0 U.S. cents per kg, up 4.1 cent.
