TOKYO, Dec 24 (Reuters) – Tokyo rubber futures fell 6.5 percent on Wednesday, pressured by slumping demand and weak crude oil prices, with the key contract dipping below 130 yen.
* The key Tokyo Commodity Exchange rubber contract for June delivery <0#JRU:> closed the session at 129.3 yen per kg, down 9 yen or 6.5 percent.
* Top rubber producing countries moved this month to try to halt the slide in physical rubber prices, and this is so far proving effective, a Tokyo-based trader said.
* “Word that producing countries won’t sell rubber below $1.35 has helped lift prices,” he said.
* Asian physical rubber prices edged higher, as market sentiment was underpinned by expectations the Thai government will soon launch a scheme to support rubber prices which are currently near five-year lows.
* The world’s top three rubber producers, Thailand, Indonesia and Malaysia, agreed not to sell rubber at below $1.35 per kg at a meeting earlier this month held to discuss measures to help prop up prices.
* Members of the International Rubber Consortium (IRCo), which together produce about 70 percent of all natural rubber, also agreed to cut exports by 915,000 tonnes in 2009.
* Separately, the new government in Thailand, the top rubber producer, last week promised to intervene in the domestic rubber market to help support prices.
* Although some traders believe the market has hit bottom, others say TOCOM rubber was still vulnerable to downward pressure depending on moves in currency and other markets.
* Activity was expected to be slow for the most part due to the approach of the year-end. TOCOM will close on Dec 30, when it ends trade at noon.
* TOCOM rubber has fallen more than 60 percent from the year’s peak of 356.9 yen marked at the end of June, battered by falling demand as global automakers reduce production due to the deepening economic slump.
* Tyres account for about 70 percent of rubber consumption.
* U.S. crude futures rose back above $39 a barrel on Wednesday, paring a 2.3 percent decline a day earlier, aided by a weaker dollar and talk of a possible emergency OPEC meeting should prices continue their descent. [O/R]
* The dollar fell 0.7 percent from late U.S. trade to 90.30 yen , giving back gains made on Tuesday. The Japanese currency staged a sharp rally to a 13-year peak near 87 yen earlier this month. [FRX/]
PRICES OF ASIAN PHYSICAL RUBBER COMPARED WITH MONDAY
Grade Price Change
Thai RSS3 (Jan) $1.40/kg +$0.05
Thai RSS3 (Feb) $1.40/kg +$0.05
Thai STR20 (Jan) $1.38/kg +$0.03
Thai STR20 (Feb) $1.38/kg +$0.03
Malaysia SMR20 (Jan) $1.35/kg +$0.05
Malaysia SMR20 (Feb) $1.35/kg +$0.05
Indonesia SIR20 (Jan) $0.61/lb +$0.02
Indonesia SIR20 (Feb) $0.61/lb +$0.02
Thai USS3 40 baht/kg unchanged
Thai 60-percent latex (drums, Jan) $1,100/tonne +$30
Thai 60-percent latex (bulk, Jan) $980/tonne +$30

Source:  Reuters

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