Tokyo Futures Slump On Stop-Loss Selling As Oil Dips

Tokyo rubber futures tumbled 8.7 percent to the lowest in more than two months on Tuesday (Mar 8), tracking falls in oil prices, with heavy stop-loss selling adding to the pressure, dealers said. The benchmark rubber contract on the Tokyo Commodity Exchange for August delivery fell 39.7 yen to settle at 416.5 yen ($5.06) per kg, the lowest since Dec. 30. It was the biggest daily decline since September 2009.
The most active contract in the Shanghai rubber futures market for May delivery fell 2,470 yen to settle at 36,205 yuan per tonne.
U.S. crude fell below $104 a barrel after the Kuwaiti oil minister said OPEC was in talks to increase production.
Dealers said technical sentiment was poor after prices fell below psychological support at 450 yen per kg. "There was huge stop-loss selling after prices fell further below 430 yen," one dealer said.
Physical prices also dropped on Tuesday (Mar 8) as traders who had hoarded rubber, expecting to sell it when prices rose higher, started releasing some from their overflowing stocks.
TOCOM prices were expected to fall further on Wednesday (Mar 9) as players liquidated contracts to avoid risk, dealers said. However, prices were unlikely to fall below a key support level at 400 yen, they said.
(Reuters, March 8, 2011)