BANGKOK: Tokyo rubber futures edged higher on Tuesday on the back of firm oil prices but the rise was capped by thin trading volumes as investors waited for clear policy moves from the Bank of Japan, dealers said.
The benchmark rubber contract on the Tokyo Commodity Exchange for August delivery rose 1.3 yen to settle at 339.3 yen ($4.13) per kg.
The most-active rubber contract on the Shanghai futures exchange for May delivery was up 295 yuan to finish at 29,090 yuan ($4,600) per tonne.
The front-month rubber contract on Singapore's SICOM exchange was last traded at 382.10 US cents per kg, up 0.4 cent.
"TOCOM prices were still supported, but players were still cautious about the BoJ's policy. So, trading was very thin and was not strong enough to push prices up significantly," one dealer said.
Trading volumes on Tokyo rubber futures stood at 6,467 lots on Tuesday, far below the more than 10,000 lots normally traded on the exchange.
The Bank of Japan is expected to refrain from easing monetary policy further on Tuesday, while stressing its readiness to act again in coming months if needed and extending a cheap loan line supporting growth industries.
However, dealers said TOCOM was still supported by firm oil prices and limited supply, and expected prices to move in the range of 330 to 340 yen.
Brent crude rebounded towards $126 on Tuesday as investors awaited comments from the US central bank after the outlook improved for the world's largest economy amid simmering tension between the West and Iran that could threaten oil supply.
Thailand, the world's biggest rubber producer and exporter, is still in the dry season, when rubber trees produce less latex. Supply is expected to be tighter in April when rubber trees stop producing latex and farmers also halt tapping.
Global demand for rubber, both natural and synthetic, is forecast to reach 26.8 million tonnes in 2012, lower than a previous forecast of 27.2 million tonnes, the International Rubber Study Group (IRSG) said on Tuesday.
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