"The market has already peaked," said a dealer in Thailand's southern town of Hat Yai.
"From now on, you will see the market trading lower because the market is in a correction period."
He said the rainy season in Thailand, the world's top rubber producer and exporter, was expected to be over soon and this had put downward pressure on prices as players expected greater supplies in coming weeks.
Offers for Thai Ribbed Smoked Sheet No 3, or RSS3, were down at $1.65 a kg for December shipment from Friday's $1.67, he said. Offers for tyre-grade Standard Thai Rubber, or STR20 block, for December and January shipment fell to around $1.65 a kg from $1.67, he said.
South Korea's state-run Public Procurement Service (PPS) said it had bought 400 tonnes of Thai RSS3 rubber for shipment between November and January in a tender on Friday.
A source close to the deal said the government agency had bought the Thai rubber at a premium of $43 a tonne over a monthly average of the spot Singapore Commodity Exchange contract in each shipment month.
In Japan, the benchmark April 2006 rubber contract on the Tokyo Commodity Exchange fell 4.3 yen per kg to 189.0 yen, having traded as low as 188.3 yen.
On Friday, the Rubber Trade Association of Japan said that crude rubber stocks held at private Japanese warehouses fell to 7,637 tonnes as of October 20, down about 3 percent from 7,874 tonnes on October 10.
Domestic crude rubber stocks plunged to an all-time low of 7,106 tonnes in August after end-users were forced to turn to inventories to cover their needs due to delays in shipments from Thailand.
Tight supply fundamentals have propelled Tokyo rubber futures higher.
The key contract topped 200 yen per kg for the first time in 17 years this month.
Despite a fall in TOCOM prices, one trader with a major trading house in Tokyo said supplies still remained tight. Sellers in Indonesia and Malaysia were reluctant to offer physical rubber this week due to the Muslim holidays in the two countries.
Malaysia's tyre-grade SMR20 was steady at around $1.62 a kg for January shipment, one trader said.
In Indonesia, the price of tyre-grade SIR20 for December was flat at 72.5 US cents a lb., or about $1.60 a kg, free on board, a trader in Tokyo said.
"Raw material supply is still tight. Buyers have to wait until the end of our holiday," a trader in Padding said. "Some offices have already closed today."