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TOKYO, July 22 (Reuters) – Key Tokyo rubber futures eked out a small gain on Wednesday thanks to steady oil prices, but the market was capped as investors took profits after prices rose to their highest in more than two months the previous day.
* The key Tokyo Commodity Exchange rubber contract for December delivery <0#JRU:> settled at 174.8 yen per kg, up 0.2 yen from the previous settlement. It rose as high as 177.2 yen, just shy of 177.4 yen hit on Tuesday, the highest for a benchmark since May 11.
* The key contract has settled up for a sixth session, the longest winning streak since early April.
* An analyst at a Japanese securities firm said there was firm resistance at 180 yen, a level the market has failed to break above since November.
* “The 180 yen level is forming a cap, and as demand remains weak, producers’ curbing output is only serving to provide the market with support rather than driving it higher,” he said.
* Thai rubber exports fell 4.7 percent in June from a year earlier, due in part to limited supply because of rain in growing areas, traders and officials said on Tuesday. The fall in exports was also due partly to a plan agreed by the top three rubber-producing countries — Thailand, Indonesia and Malaysia — to cut exports by 915,000 tonnes in 2009 to prop up prices, dealers said. [ID:nBKK466099]
* There are expectations that demand in China may recover due to the government’s stimulus measures and prompt producers to lift their output curbs, traders said.
* “For the time being rubber, like other commodities, will likely drift sideways as liquidity falls for the summer and players wait for more clues for a clearer economic outlook and determine market direction,” the analyst said, expecting rubber prices to trade between 150-170 yen.
* The rubber market recouped earlier losses as oil prices recovered from an earlier low below $65 a barrel to hover just above $65 on Wednesday. [O/R]
* The yen rose against major currencies on Wednesday after Federal Reserve Chairman Ben Bernanke’s cautious view on the U.S. economy prompted investors to pare their risk appetite. [USD/]
* A higher yen deflates yen-based commodity futures prices and weighs on market sentiment.
Source: Reuters