The benchmark June rubber contract on the Tokyo Commodity Exchange ended down 0.5 yen or 0.23 percent at 221.5 yen per kg after trading between 219.1 and 221.9.
The closing price was 6.1 yen or 2.7 percent lower than the 17-year high of 227.6 yen set on December 12. But it was still 87 percent higher from this year's low of 118.3 yen in January.
TOCOM rubber staged a bull run this year on active investor buying amid worries about supplies from Thailand, the world's top producer and exporter of natural rubber.
Rubber production in Thailand has been hit this year by bad weather conditions and violence in key rubber producing areas.
Reflecting tighter supplies from Thailand, crude rubber stocks in Japan plunged to a record low of 7,106 tonnes in August, according to data compiled by the Rubber Trade Association of Japan. As of December 20, stocks were at 8,406 tonnes.
"TOCOM rubber looks set to test the upside, as rubber production in Thailand was hit again by heavy rains this month," one broker said. "The key contract could break above 230 yen." If the contract tops 230 yen, it would be the first time since July 1984, when prices rose as high as 230.5 yen.
Volume of TOCOM rubber was light at 16,432 lots on Friday, as operators mostly stayed on the sidelines ahead of the holidays.
TOCOM will be closed on Monday and Tuesday for the New Year holidays and will hold a half-day session on Wednesday. The exchange will be closed again on January 9 for a national holiday.