BANGKOK, April 19 (Reuters) – Tokyo rubber futures fell 5 percent to a three-week low on Tuesday as a warning by Standard & Poor’s to cut the United States’ AAA credit rating triggered heavy stop-loss selling.
Weaker oil prices also added to the downward pressure on prices, dealers said.
The benchmark rubber contract on the Tokyo Commodity Exchange <0#JRU:> for September delivery was down 15.3 yen to settle at 409.7 yen ($4.956)per kg.
It fell as much as 21.3 yen, or 5 percent, to an intra-day low of 403.7 yen per kg, the lowest since March 29.
The most-active Shanghai rubber contract for September delivery fell 1,090 yuan to settle at 33,870 yuan ($5,187.868)per tonne.
“The warning by S&P encouraged players to rush to sell contracts in a bid to stop losses. It’s purely a technical sale today … prices finally rebounded after finding a strong support level of 400 yen,” a Tokyo-based trader said.
Standard & Poor’s revised its outlook on the United States credit rating downward to “negative” on a poor U.S. budget outlook, while China took additional measures to curb liquidity.[ID:nN18195555]
The warning also pushed oil prices down on fears of falling demand as the global economic outlook turned poor after the warning.
U.S. crude futures extended losses in early Asian trade on Tuesday after S&P’s revision. OPEC ministers said high crude prices could weigh on consumer economies. [ID:nL3E7FJ01F]
Traders said fundamental factors remained unchanged and had small impact on TOCOM move.
Recent severe flood had minimal impact on rubber production in Thailand, the world’s biggest producer and exporter, cutting 1 percent of the country’s annual production to 3.46 million tonnes. [ID:nL3E7FJ0QW]
However, there were some hedgers who kept buying TOCOM contracts after prices found a strong support at 400 yen level, pushing prices to recover from early session losses.
“TOCOM rubber should rebound further on Wednesday to test the new resistance of 425 yen,” another Singapore-based trader said.
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Source: Reuters

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