TOKYO, Oct 28 (Reuters) – Key Tokyo rubber futures fell 0.5 percent on Wednesday, with sentiment weighed down as investors took profits from the market’s recent rally to one-year highs in the absence of major events.
* But the Tokyo market is expected to resume its upturn after a technical correction given unusually low rubber inventory levels in Japan, traders said.
* The key Tokyo Commodity Exchange rubber contract for April delivery <0#JRU:>, which debuted on Tuesday, closed at 229.7 yen, down 1.1 yen from the previous day.
* The then benchmark March contract hit a high of 235.7 yen on Oct. 23, the highest for any benchmark since October 2008, when technical buying related to Monday’s expiry of the October contract helped push up prices.
* “It’s in a correction mode for now. But the market is basically in an uptrend because poor inventory currently means buying for physical delivery will emerge in any falls toward an expiry (of the nearby contract),” said a manager at a Japanese commodity brokerage.”
* Japan’s crude rubber inventories totalled 4,195 tonnes as of Oct. 20, down 16.4 percent from 10 days earlier and down 10.2 percent from a year earlier, data from the Rubber Trade Association of Japan showed.
* Oil edged down towards $79 a barrel on Wednesday, giving up some of the previous day’s 1.1 percent gain on weaker Asian equities and a steady dollar, but losses were limited after industry data showed a surprise large drawdown in U.S. crude inventories. [O/R]
* Japan’s Honda Motor Co <7267.T> exuded optimism while Germany’s Daimler AG spread gloom about the outlook for car markets on Tuesday, highlighting the patchy nature of any post-crisis rebound. [ID:nLR387222]
* Japan’s largest automaker Toyota Motor Corp <7203.T> said on Wednesday its global output fell 2.5 percent in September from a year earlier. [ID:nT122680]
* But consistent demand from China, the biggest rubber consumer, means supply will remain tight in producing countries. Growing signs of El Nino were noted as another factor supporting rubber prices.
* Ocean surface temperatures in the central equatorial Pacific have warmed further and now exceed levels typical of an El Nino event by their greatest margin of the year, Australia’s weather bureau said on Wednesday. [ID:nSYDU00895]
* In the currency market, the yen rose across the board on Wednesday as investors trimmed stretched risk positions in higher-yielding currencies with stocks falling following weaker than expected U.S. data. [USD/]

Source: Reuters

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