Tokyo rubber up on strong charts, supply concerns

TOKYO, May 14 (Reuters) - Tokyo rubber futures advanced to a
two-and-a-half-month high on Wednesday after bullish technical
signals and concerns over supply tightness in Thailand
encouraged strong buying by investment funds.

* Physical rubber prices were strong, supported by tight
supplies as heavy rains in Thailand, the world's top producer,
has prevented a return to normal output after the end of the
wintering dry season, when production falls.

* Japanese rubber futures were also supported by strength in
oil prices and a weaker yen.

* The key Tokyo Commodity Exchange rubber contract for
distant October delivery <0#JRU:> finished the morning session at
314.3 yen per kg, up 0.4 yen or 0.1 percent from Tuesday's close.

* The benchmark distant contract rose as far as 315.7 yen --
the highest for a benchmark since Feb. 27.

* Technical sentiment was bullish, with the key contract
above all major moving average levels. The next key chart levels
would be 318.7 yen reached on Feb. 27 and 324.3 yen marked a day
earlier.

* A support line was seen at the five-day moving average of
around 310 yen.

* Oil was little changed just below $126 on Wednesday, with
traders awaiting an expected rebound in weekly U.S. distillate
stocks and still on edge over the previous day's report that Iran
was considering a proposal to cut output. [ID:nSP8271]

* The dollar inched higher against the yen after
stronger-than-expected U.S. retail sales data supported the view
that the Federal Reserve won't cut interest rates next month.
[ID:nT254482]

* Japan's crude rubber inventories fell 3 percent to 11,925
tonnes as of April 30 from April 20, the Rubber Trade Association
of Japan said on Tuesday. The latest figure represents a 34
percent decline from a year earlier when stocks amounted to
18,101 tonnes. [ID:nT219648]

PRICES OF ASIAN PHYSICAL RUBBER COMPARED WITH TUESDAY

Grade Price Change

Thai RSS3 (June) $3.03/kg +$0.03

Thai RSS3 (July) $3.03/kg +$0.03

Thai STR20 (June) $2.93/kg +$0.03

Thai STR20 (July) $2.93/kg +$0.03

Malaysia SMR20 (June) $2.90/kg +$0.01

Malaysia SMR20 (July) $2.90/kg +$0.01

Indonesia SIR20 (June) $1.33/lb +$0.01

Indonesia SIR20 (July) $1.33/lb +$0.01

Thai USS3 90 baht/kg +0.5 baht

Thai 60-percent latex (drums, June) $2,020/tonne unchanged

Thai 60-percent latex (bulk, June) $1,900/tonne unchanged
(Reporting by Chikafumi Hodo)