Your symptoms point to the cable.

Let me be clear, the cable I suspect is probably the one you suspect, the short gray sheathed set of two wires leading from the junction box near the left rear wheel housing through the floor and terminating at the differential sender terminals.

This cable is made of high-strand-count ultra flexible wiring with silicone insulation. The insulation provided much of the physical support of the wiring but any more has become brittle and cracked and perhaps missing parts. Sorry, I can't help you regarding where to find a plug'n'play replacement; I'd just resort to a junkbox-sourced repair instead of the proper renewal.

Do a bit of visual inspection at the rear axle. If you're still not sure, you might find some help here http://cleanflametrap.com/speedoDiag.html

P.S. I need to edit that web page to be clear that an "AC Adaptor" being referenced is an adaptor with AC Output. These days, modern wall warts are called AC adaptors when the provide DC output. Folks have told me finding one with AC output isn't as easy these days.

These pics refer to a later car, but the wiring is similar.




--
Art Benstein near Baltimore

The first couple to be shown in bed together on prime time were Fred and Wilma Flintstone.

I would not jump to a cable replacement without evidence of it being at fault. It may be a considerable hassle to replace. You don't mention if you have any manuals that show the cable's routing. Perhaps someone here could give a description. The simplest first step might be to look under the rear of the car and see if the sensor and the cable connection appear to be intact.

Hi,

If this car is truly a 1987 it doesn’t have a cable. In 1985 I believe the 240s went to electronic speedometers.
Have you been working in or around on the dash?anything related to this recently?
Was the odometer working before this or has it quit early on? The odometers are know to quit before 200k
but it usually doesn’t affect the speedometer needle.

If it all quit at the same time … You maybe losing a connection for the signal either at the back of the instrument cluster or from the rear differential wiring.

Use the Search box and try to glean some more knowledge from previous posts on this subject.

You can also try CleanFlametrap.com if you are technically inclined.
Otherwise, you will have to wait for other posters for better guidance and suggestions.

Phil