Tokyo rubber futures fell to a five-month low by midday on Monday as improving weather in producing countries hit a market already vulnerable on bearish technical factors. Tapping in Thailand, the world's biggest rubber producer, was delayed by heavy rain by mid-June. But conditions have since improved, traders said.
The benchmark Tokyo Commodity Exchange rubber contract for December delivery ended the morning session at 248.5 yen ($2.02) a kg, down 1.2 percent or 3.1 yen from the previous close.
"The market was bought at the opening, helped by the strength in other commodities markets, such as grains and energy," said a manager at a Japanese commodities brokerage firm. "But buying didn't last long, and now that rubber prices in the producing countries fell, investors were fleeing from the market," he said.
TOCOM rubber remained bearish on the charts, with the key contract staying below the long-term moving average for the third day in a row, which is its 200-day average at 254.1 yen as of Friday's close.
Some traders say TOCOM rubber could now test this year's low of 235.8 yen set on January 8. In the physical market, rubber prices were mostly lower as buyers retreated to the sidelines, expecting prices to fall further this week given improving weather in Thailand.
Supply concerns revived last week after a fire at a rubber plant in Thailand on June 23, which later turned to have had almost no impact on supplies. "Weather has been improving in the past two to three days. I expect prices to fall this week from last week," said a trader in Hat Yai, Thailand's rubber trading hub.