TOKYO/BANGKOK, Oct 27 (Reuters) – Key Tokyo rubber futures contract fell by the daily 16 yen limit for a second straight day on Monday, hitting the lowest level for any benchmark since July 2005, as falling stock markets deepened concerns about demand.
The benchmark rubber contract on the Tokyo Commodity Exchange <0#JRU:> for March 2009 delivery closed limit-down at 159.2 yen per kg, or down 9.1 percent from the previous close.
The nearby October contract expired earlier in the day at 161.1 yen per kg, down 19.5 yen from Friday close. It was the lowest expiry since May 2005. [ID:nT101278]
The TOCOM market took a hit also because of a sell-off in oil and other commodities and the stronger yen, traders said.
“Stocks are down, other commodities are down, and the dollar is also down. Given all these at once, I don’t see any reason to buy rubber,” said a senior manager at a Tokyo-based commodity brokerage.
“Technically, there is no solid support down until around 120 yen,” he said.
Thailand, the world’s biggest rubber producer, plans to cut production by 700,000 tonnes in the six months starting from October, to shore up prices, the Agriculture Ministry said on Monday. [ID:nBKK391607]
But the news was largely shrugged off in the face of a slew of news recently about a slump in the auto sector.
“The move in Thailand is aimed to keep raw material prices from falling for the sake of farmers. But prices will not stop falling unless demand recovers,” the senior manager in Tokyo said.
Underlining concerns about global demand, oil dropped 3 percent to another 17-month low on Monday. [O/R]
The yen stayed near a 13-year peak against the dollar and climbed toward an all-time high against the Australian dollar as investors repatriated from risky positions and drove Tokyo shares to a 26-year low, overshadowing a G7 warning about excessive yen volatility. [USD/]
A stronger yen deflates yen-based TOCOM futures prices.
On the physical front, rubber prices were mostly unchanged as falling supply offset falls on TOCOM.
Physical trade remained thin on Monday as Singapore, the regional rubber trading centre, was closed for a public holiday. Trading will resume on Tuesday.

PRICES OF ASIAN PHYSICAL RUBBER COMPARED WITH FRIDAY
Grade Price Change
Thai RSS3 (Dec) $1.85/kg unchanged
Thai RSS3 (Jan) $1.85/kg unchanged
Thai STR20 (Dec) $1.85/kg unchanged
Thai STR20 (Jan) $1.85/kg unchanged
Malaysia SMR20 (Dec) $1.85/kg unchanged
Malaysia SMR20 (Jan) $1.85/kg unchanged
Indonesia SIR20 (Dec) $0.81/lb -$0.01
Indonesia SIR20 (Jan) $0.81/lb -$0.01
Thai USS3 59 baht/kg unchanged
Thai 60-percent latex (drums, Dec) $1,400/tonne unchanged
Thai 60-percent latex (bulk, Dec) $1,250/tonne unchanged ($1=34.63 baht) ($1=93.80 Yen)

Source:  Reuters

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