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TOKYO, June 22 (Reuters) – Key Tokyo rubber futures fell over 3 percent on Wednesday, dragged lower by selling in Shanghai rubber futures, concerns over demand from China and rising supplies from top producer Thailand.
The benchmark rubber contract on the Tokyo Commodity Exchange <0#JRU:> for November delivery fell 12.9 yen, or 3.4 percent, to settle at 364.7 yen per kg. The contract dropped as much as 3.7 percent to 363.8 yen.
The most active Shanghai rubber contract for September delivery fell 920 yuan, or 2.8 percent, to close at 32,390 yuan ($5,009.761) per tonne on Wednesday. Volume stood at 996,880 lots.
“The decline in the Shanghai market was the main driver for TOCOM’s drop today,” said Hiroyuki Kikukawa, a general manager at trading company Nihon Unicom Inc in Tokyo.
“A fall below the support level for the past 20 days also prompted selling. Chinese car sales are also falling year-on-year, while supplies from Thailand are returning to normal. All these factors are keeping the market top-heavy,” he said.
For now, the TOCOM benchmark will likely see resistance at 400 yen per kg, while a low in May of around 353 yen and a March trough around 335 yen will likely serve as support, Kikukawa said.
The rubber market may also react to the oil market if oil prices move on the Federal Reserve’s comments on the slowing U.S. economy, he said.
The U.S. Federal Reserve begins the second-day of a two-day policy meeting later on Wednesday, followed by a news conference by its chairman Ben Bernanke.
Brent crude rose on Wednesday, reversing five sessions of losses, as Greece’s embattled government survived a confidence vote critical to avoid a debt default and as investors awaited the outcome of the Fed meeting. [O/R]
The euro ran into profit-taking on Wednesday and the Nikkei stock average climbed 1.8 percent. [.T]
Sales of previously owned U.S. homes hit a six-month low in May and supply rose, pointing to a housing market still struggling to regain its footing. [ID:nN1E75K0JS]
Germany’s Daimler warned of growing economic risks in emerging markets such as China that could cause the auto industry’s growth engine to sputter. [ID:nN1E75K18T]
Source: Reuters