The benchmark April 2006 contract on the Tokyo Commodity Exchange (TOCOM) fell 2.9 yen per kg to 189.0 yen in afternoon trade after going as high as 190.6 yen.
The most active contract has been hit by profit-taking since rising to a 17-year high of 206.6 yen on October 12 on fund buying driven by low domestic inventory levels in Japan and tight supplies from major producers. "The high production period is approaching in Thailand. People are selling their latex, smoked sheet and cup-lump," said one dealer in Malaysia's northern state of Penning. "It looks like the price of raw material keeps falling every day.
Supply is also good in Malaysia and SMR20 has breached the $1.60 level," he said.
Dealers noted a lack of interest from consumers on Monday, which suggested that tyre-makers were waiting for the price to fall further as heavy rains subsided in Thailand and allowed tapping to resume.
Trading was particularly quiet in Indonesia, the world's second-largest producer after Thailand, due to the long Muslim Eid-ul-Fitr holidays. Indonesia's tyre-grade SIR20 was offered by some traders in Jakarta at around $1.57 a kg free on board Begawan port in North Sumatra and Plumbing in South Sumatra for December delivery, down from $1.58 on Friday.
Malaysia's tyre-grade SMR20 fell to around $1.59 a kg for December delivery from $1.62 last week. Tyre-grade Standard Thai Rubber, or STR20 block, for December and January shipment fell to $1.62 a kg from last week's $1.64 a kg.
In addition to an improvement in supply in Thailand, a weaker oil price put pressure on Japanese rubber futures, said dealers. Rubber prices often benefit from high crude oil prices, mainly because investors believe expensive oil will encourage a shift to natural rubber from synthetic rubber, a petroleum product. "I think 187 and 188 yen should provide some support for the market. But if it is broken, 180 should be the target," said one dealer in Tokyo, adding that the short-term outlook was bearish.
Crude oil prices fell to $60 on Monday because of mild weather in the Northern Hemisphere, with a recovery in US crude production soothing worries over a supply shortfall.
Weak Tokyo futures spurred selling in China, where the most active March rubber contract on the Shanghai Futures Exchange fell 525 yuan per tonne to 17,140 yuan in afternoon trade.