Rubber dropped for a second week amid concern that Europe’s debt crisis is worsening and as the Japanese currency strengthened, reducing the appeal of yen-based contracts.
The contract for delivery in August retreated 1.2 percent to 278.5 yen a kilogram ($2,937 a metric ton) today on the Tokyo Commodity Exchange. Futures fell 1.6 percent this week and 7.9 percent this year.
The European Central Bank gave Cyprus until the start of next week to agree to a bailout package or lose emergency funding. The yen strengthened this week against 14 of its 16 major counterparts, trading at 94.83 per dollar, on speculation stimulus efforts by new Bank of Japan leadership will fall short of investor expectations.
“The strengthening yen and Cyprus news pushed down commodity prices including rubber,” said Gu Jiong, an analyst at commodity broker Yutaka Shoji Co.
Rubber is poised to enter a bear market in the next month as a dead-cross formation signals a further sell-off, according to Trading Central SA. Support was forecast at 242 yen, a level last seen in November, said Ludwig Garric, a technical analyst at the Paris-based company.
The contract for September delivery on the Shanghai Futures Exchange dropped 0.4 percent to close at 22,805 yuan ($3,671) a ton. Thai rubber free-on-board declined 0.5 percent to 86.20 baht ($2.94) a kilogram today, the Rubber Research Institute of Thailand said on its website.