Benchmark Tokyo rubber futures slid on Wednesday, surrendering earlier gains backed by higher oil prices, as investors unwound positions ahead of the expiry of a near-term contract and tracking a dip in the Shanghai market, dealers said.
"Basically, today's trades were dominated by position adjustments," Hiroyuki Kikukawa, general manager of research at Nissan Securities said.
The Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery finished 1.2 yen, or 0.8 percent, lower at 155.1 yen ($1.41) per kg, after rising to a high of 161.3 yen.
But the May contract, which expired on Wednesday, surged 8.8 yen, or 5.9 percent, to end at 158.9 yen per kg.
TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, started with a positive tone after oil prices jumped overnight, but front-month contracts including the benchmark came under pressure later due in part to weaker Shanghai futures, dealers said.
Oil futures pushed closer to $50 a barrel on Wednesday, with U.S. crude hitting its highest in over seven months after industry data suggested a larger-than-expected drawdown in U.S. crude inventories last week.
The most-active rubber contract on the Shanghai futures exchange for September delivery fell 75 yuan to finish at 10,255 yuan ($1,562.83) per tonne.
"Since the wintering season at Southeast Asian producing countries is ending and their output is expected to rise, an overall market tone will likely remain bearish," Kikukawa said.
Rubber is tapped year-round, but latex output drops during the dry wintering season, when trees shed leaves. Wintering in Thailand, Malaysia and Indonesia lasts from around February to May.
The front-month rubber contract on Singapore's SICOM exchange for June delivery last traded at 123.5 U.S. cents per kg, down 3.5 cent.
