Benchmark Tokyo rubber futures fell on Monday, weighed down by the Japanese yen's advance to a five-month high against the dollar amid rising geopolitical tensions over North Korea.
The dollar dipped to a five-month low against the yen on Monday as rising tensions over North Korea kept the safe-haven Japanese currency in demand. A stronger yen makes yen-denominated assets less affordable when purchased in other currencies.
US Vice President Mike Pence put North Korea on notice on Monday that neither the United States nor South Korea would tolerate further missile and nuclear tests, with US attacks in Syria and Afghanistan showing its resolve.
"On top of a higher yen, weaker oil also added to the pressure on rubber prices," said Toshitaka Tazawa, analyst, Fujitomi Co.
Crude oil fell on Monday in quiet trading after the three-day Easter break on signs the United States is continuing to add output, undermining OPEC efforts to support prices.
The Tokyo Commodity Exchange (TOCOM) rubber contract for September delivery finished down 2.0 yen, or 0.9%, at 216.5 yen (US$2) per kg, moving closer to a near five-month low hit last Thursday.
But the TOCOM's April contract, which is due to expire next Monday, jumped by 7 yen, or 2.7%, to end at 266.0 yen per kg.
The TOCOM has urged any investors with open positions in April rubber futures to settle contracts well before expiration on April 24, with exchange inventories sitting at a level low enough to pose a risk of sudden price swings.
"With Thailand's plan to sell inventories, rubber market is expected to stay bearish," Tazawa said, citing all eyes are on whether the TOCOM could keep the 200-yen level.
Last month, Thailand said it aims to offload remaining 107,000 tonnes of rubber stockpiles by the end of May.
The most-active rubber contract on the Shanghai futures exchange for September delivery rose 45 yuan to finish at 14,905 yuan (US$2,164) per tonne.
The front-month rubber contract on Singapore's SICOM exchange for May delivery last traded at 159.6 US cents per kg, down 2.2 US cents.
