Benchmark Tokyo rubber futures hit a nine-month high early on Wednesday, helped by firmer oil and a soft yen, but surrendered gains to end lower as weaker Shanghai futures led investors to unwind long positions, dealers said.
The Tokyo Commodity Exchange rubber contract for October delivery <0#2JRU:> finished 0.4 yen lower at 200.9 yen ($1.81) per kg, after touching a high of 205.1 yen, the highest since July 31, 2015.
"The market was lifted by stronger oil prices, a weaker yen and Shanghai futures' gain in early trade, but investors unwound positions after Shanghai prices started sliding," said Jiong Gu, an analyst at Yutaka Shoji.The most-active rubber contract on the Shanghai Futures Exchange for September delivery fell 95 yuan to finish at 12,945 yuan ($1,994.18) per tonne, after rising as high as 13,245 yuan.
Crude oil futures rose around half a dollar on Wednesday and remained near 2016 highs on the back of strong investor sentiment and a weak dollar, although analysts warned this month's bull-run could soon run out of steam.The greenback slipped 0.2 percent to 111.06 yen, but was still within striking distance of a three-week high of 111.90 reached on Monday on expectations of further BOJ easing this week.
The Bank of Japan makes its policy decision on Thursday amid some speculation it could ramp up its already extensive monetary stimulus scheme, which includes negative interest rates on some deposits at the BOJ."We hear main producing areas in Thailand are getting some rain, suggesting dry wintering season may be ending soon.
That may weigh on market sentiment next month," Gu said.Rubber is tapped year round but latex output drops during the dry wintering season, when trees shed leaves. Wintering in Thailand and Malaysia lasts from February to April.
There had been some speculation among traders that bad weather in Southeast Asia due to El Nino might affect rubber output.The front-month rubber contract on Singapore's SICOM exchange for May delivery last traded at 154.1 U.S. cents per kg, down 1.8 cents. ($1 = 111.1600 yen) ($1 = 6.4914 Chinese yuan)
