The big rubber producers of Thailand, Indonesia, Malaysia are experiencing heavy rains, which limits cultivation in the fields. But traders know the clouds will dry up soon enough.
"Fundamentally, the rubber market is weak because the rain is just a short term effect. And once the rain is over we'll be moving into peak production in December," said one Thai trader in the southern town of Hat Yai.
In Tokyo, the benchmark March 2006 rubber contract fell 1.5 yen per kilogram to 194.8 yen.
Dealers noted that physical prices ignored sharp gains in oil prices overnight as rubber often benefits from high crude oil prices. High prices oil may encourage a shift to natural rubber from the synthetic kind, a petroleum product.
"The general feeling is there's enough rubber around nearby and there's no great demand at the moment, buyers may come in later, but at the moment it's looking a bit softer," said one Singapore dealer.
Goodyear Tire & Rubber Co and Bridgestone Corp bought Thailand's STR20 block late on Tuesday at $1.67 a kilogram, free-on-board, for shipment in January shipment.
December shipment was offered nearly two percent lower at $1.67 a kg, while buyers were bidding at $1.66. Offers for Malaysia's tyre-grade, SMR20, were lower at $1.63 a kilogram, for December shipment, compared to $1.66 a yesterday. Dealers were bidding to buy SMR20 at $1.62.
Indonesia's tyre-grade SIR20 traded overnight at $1.61, free-on-board, from East Java for January shipment by dealers, virtually unchanged from Tuesday. "It's been quiet, China is not active at the moment, despite the fact we offer the cheapest in the region," said one Padang trader in Sumatra island.
Raw material prices for export-grade rubber in Thailand, benchmark unsmoked rubber sheet grade 3, or USS3, fell slightly to 64 baht a kg from 65 baht on Tuesday.