Natural rubber futures on the Tokyo Commodity Exchange fell by 3.6% Thursday hitting limit-down during intraday trading for the second time in two weeks, as investors closed out long positions to reduce losses.
Some traders were taken off guard by the decline, which marked a sharp reversal of a recent uptrend that saw the benchmark Tocom contract reach a 14-month high Friday as rubber tracked other commodities, helped by its own fundamentals.
"As the market continued to tumble, many (traders) panicked and quickly closed their positions to cut losses," said an executive at a Japan-based commodities brokerage.
The benchmark Tocom May RSS3 grade contract reached an intraday low of Y242.9 a kilogram, Y10 lower and closed Y9.1 lower at Y243.8/kg.
On Nov. 27, the contract had hit another speed bump in its recent upward drive after the International Rubber Consortium removed restrictions on exports and due to jitters associated with the Dubai World debt crisis, settling Y11.9 lower at Y241.2/kg before recovering to the recent peak of Y264.7/kg Friday night.
"Rubber is following gold, platinum and crude oil downhill--but the decline isn't as steep as in the case of other commodities," noted a broker in Tokyo.
Gold prices have declined by more than 8% since hitting record highs above $1,225/oz last week.
Light, sweet crude for January delivery settled $1.95, or 2.7%, lower at $70.67/barrel Wednesday on the New York Mercantile Exchange, the contract's lowest level since Oct 7. It has been steady in electronic trading during Asian hours.
There could have been further price declines in rubber but for physical buying, the broker said.
"Buyers tend to come in when price is down," he noted.
(Source: irco.biz)
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