Oil Report

Tokyo rubber slumps to 2-week low on broad sell-off

TOKYO, April 14 (Reuters) - Tokyo rubber futures fell more than 1 percent to a two-week low on Monday as weakness in other commodities and strength in the yen put pressure on prices, with bearish technicals prompting fund selling.

The benchmark September rubber contract on Tokyo Commodity Exchange <0#JRU:> fell as far as 277.6 yen per kg -- the lowest since March 31.

Light bargain-hunting briefly lifted the key contract to an intraday high of 281.4 yen but it lost ground in line with falls in other commodities.

September TOCOM rubber ended morning trade at 278.3 yen, down 3.7 yen or 1.3 percent from Friday’s close of 282.0 yen.

“Rubber was weighed down by the general strength in the yen and the weakness in other commodities, but follow-through sales were limited after finding some support below 280 yen,” said Jun Nishimuta, analyst at Kanetsu Asset Management in Tokyo.

“The market is expected to trade around 280 yen for a while.”

Rubber was blocked by a series of technical resistance lines, including the five-day moving average of 282.4 yen and the 10-day average of 284.9 yen.

Shuji Sugata, manager at Mitsubishi Corp Futures and Securities, said the technical trend deteriorated after the key rubber contract failed to rise above 295 yen last week.

“Technicals are very weak. Long holders are eager to cut positions,” Sugata said.

Key support is seen around this year’s low of 266.1 yen reached on March 21. Rubber is also expected to be supported at the 200-day moving average of 276.7 yen.

“A failure to keep 277.1 yen (a low hit on March 31) could accelerate sales to drive the price down to 266.1 yen very quickly,” Sugata said.

Falls in other yen-based commodities such as TOCOM platinum <0#JPL:>, which was down about 4 percent, and weakness in the Nikkei average .N225 undermined sentiment for rubber.

Market activity was expected to be thin due to the New Year holidays in Thailand, the world’s biggest rubber producer.

Yet firm physical rubber prices were expected to provide support to TOCOM rubber as farmers in key producing countries halted tapping during the dry season when rubber trees stop producing latex, traders said. (Reporting by Chikafumi Hodo; Editing by Chris Gallagher)