Japan rubber futures fall on expectations of higher supplies

Japanese rubber futures fell for the first time in three sessions on Wednesday, as expectations of improved natural rubber supplies weighed on prices, offsetting support from firmer oil prices and a further weakening of the yen.

The Osaka Exchange (OSE) rubber contract for December delivery  was down 1.2 yen, or 0.29%, at 413.4 yen ($2.54) per kg.

The contract posted its first daily loss this week.

The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery traded flat yuan to 16,655 yuan ($2,451.36) per metric ton.

The most active September but adiene rubber contract on the SHFE fell 135 yuan, or 1.13%, to 11,825 yuan per metric ton.

Supplies from major Southeast Asian producers such as Thailand, Indonesia and Vietnam, are increasing as plantations emerge from the wintering season, a period of low latex output.

“Most (traders) are expecting supply to come onboard nicely,” said Farah Miller, CEO of rubber data analytics firm Helixtap Technologies.

The weakness extended to Thai physical benchmarks, with export-grade smoked rubber sheet (RSS3) and block rubber were down 1.03% and 2.6%, to stand at 92.05 baht per kg and 77.52 baht per kg, respectively.

Oil prices ticked higher on Wednesday on concerns a breakdown in talks between Iran and the U.S. for a final agreement to end their war may extend supply disruptions in the key Middle East producing region.

The dollar hit a 40-year high against the yen on Wednesday as a sharp rise in U.S. Treasury yields boosted the currency ahead of U.S. jobs data that could strengthen the case for a Federal Reserve rate hike this month.

Both factors typically support rubber prices. Higher oil raises production costs for synthetic rubber, while a weaker yen makes yen-denominated contracts cheaper for overseas buyers.

The front-month rubber contract on Singapore Exchange’s SICOM platform for July delivery last traded at 209 U.S. cents per kg, down 0.6%.