TOKYO: Benchmark Tokyo rubber futures extended gains into a third straight session on Tuesday, hitting a near three-year high, as stronger Shanghai futures and a weaker yen against the dollar prompted buying.
"Tokyo's rally was driven by a surge in Shanghai futures," said Satoru Yoshida, commodity analyst, Rakuten Securities.
The Tokyo Commodity Exchange (TOCOM) rubber contract for May delivery finished up 3.7 yen, or 1.4 percent, at 259.7 yen ($2.25) per kg. Earlier in the session, it hit a high of 260.1 yen, the highest since Jan. 7, 2014.
The most-active rubber contract on the Shanghai futures exchange for May delivery jumped 655 yuan to finish at 20,110 yuan ($2,913.65) per tonne. Early in the trade, it rose to 20,115 yuan, the highest since February 2014.
The dollar rose overnight to as far as 116.120 yen, its highest since early February as the benchmark 10-year Treasury yield popped above the 2.5 percent threshold on a surge by oil prices to a level unseen since September 2014. It was traded at 115.34 yen late Tuesday in Asia trade.
A weaker yen makes yen-denominated assets more affordable when purchased in other currencies.
"TOCOM may slip towards 260 yen by position adjustments as the recent rally may have been overdone," Yoshida said.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, have increased more than 70 percent since the end of August, amid anticipations that demand in top buyer China was improving and massive speculative buying.
The front-month rubber contract on Singapore's SICOM exchange for January delivery last traded at 201.5 U.S. cents per kg, up 12.5 cent.
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