TOKYO, April 7 (Reuters) – Tokyo rubber futures rose to their highest level in almost five months on Tuesday, as improved technical charts encouraged dip-buying when prices eased, and kept the downside limited.
* Behind the market’s recent advance was the dollar’s rise above 100 yen, which caught some investors off guard and resulted in their short yen-based rubber futures positions being squeezed.
* The key Tokyo Commodity Exchange rubber contract for September delivery <0#JRU:> ended up 4.8 yen or 2.8 percent at 174.7 yen per kg. The benchmark contract rose as high as 174.9 yen, the highest intraday level for any benchmark since Nov. 17.
* “Investment funds started buying after the key contract broke above key resistance of 154 yen,” a manager at a Japanese commodity brokerage said. “Then the currency market surprised yen bulls as the yen fell to 100 to the dollar.”
* “The pace of the rally looks too fast to be sustainable. There’s a chance the market will take a break for now,” he said.
* While some traders express concern about the pace of the rubber market’s rise, they acknowledge tight supply in the physical market and customer demand to keep prices firm.
* A new round of fund buying had been detected as a rise in car sales last month in Germany fuelled optimism that the worst is over in terms of global tyre demand, and because of an improvement in technical charts, traders said.
* A dealer in Jakarta said a deal for SIR20 was done late on Monday for May loading at 66.50 cents per pound and at 67 cents per pound for June loading. He also said that Bridgestone bought RSS4 for September delivery at 161.50 cents per kg, at a slightly higher price offered the previous day, underlying tighter supply was lifting prices.
* The spot April 2009 contract, which reflected a supply shortage in the physical market, rose 6 yen or up 3.7 percent to 169.5 yen.
* After a one-day holiday, Shanghai rubber futures <0#SNR:> rose almost 4 percent on Tuesday in a catch-up rally after the Tokyo market’s recent gains.
* Asian physical rubber prices rose on Tuesday as producers were bullish given firmness in the Tokyo market.
* Cash rubber prices in Thailand, the world’s biggest producer, are likely to fall over the next few weeks due to an increase in supply as farmers resumed tapping earlier than expected, officials and traders said on Tuesday. [ID:nBKK415588]
* Farmers in Thailand usually stop tapping in late February, when the dry season starts, and resume tapping in late April.
* The yen and the dollar climbed on Tuesday, benefiting from defensive position-taking as a flush of optimism that powered a recent rally in stocks and higher-risk currencies gave way to caution about banks. [USD/]
* The dollar traded at 100.3 yen , down 0.7 percent from the previous day but not far from a five-month high of 101.45 yen marked on Monday.
* The Bank of Japan kept interest rates at 0.1 percent as expected. [ID:nT188932]
* Crude oil futures steadied around $51 a barrel on Tuesday after a near 3 percent loss on Monday when Wall Street tumbled. [O/R]

PRICES OF ASIAN PHYSICAL RUBBER COMPARED WITH MONDAY
Grade Price Change
Thai RSS3 (May) $1.64/kg +$0.08
Thai RSS3 (Jun) $1.64/kg +$0.08
Thai STR20 (May) $1.62/kg +$0.08
Thai STR20 (Jun) $1.62/kg +$0.08
Malaysia SMR20 (May) $1.60/kg +$0.06
Malaysia SMR20 (Jun) $1.60/kg +$0.06
Indonesia SIR20 (May) $0.68/lb +$0.03
Indonesia SIR20 (Jun) $0.68/lb +$0.03
Thai USS3 52.0 baht/kg +2 bahts
Thai 60-percent latex (drums, May) $1,300/tonne unchanged
Thai 60-percent latex (bulk, May) $1,200/tonne unchanged

Source: Reuters

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