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Nov. 5 (Bloomberg) — Rubber declined for the second time in three days, reversing earlier gains, as a stronger Japanese currency versus the dollar reduced the appeal of yen-denominated contracts.
Prices in Tokyo also retreated as crude oil snapped three days of gains, reducing the appeal of natural rubber as an alternative to synthetic products made from petroleum. Futures earlier advanced as Thailand, the world’s largest producer, forecast a slump in output because of heavy rain.
“A stronger yen was a major drag on the price of rubber futures,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd., said today by phone. “The market also took a cue for direction from the energy market.”
April-delivery rubber fell as much as 1.8 yen to 226.6 yen a kilogram ($2,505 a metric ton) on the Tokyo Commodity Exchange before settling at 227.8 yen.
The yen rose to 90.48 per dollar at 3:29 p.m. in Tokyo from 90.72 in New York yesterday as Asian stocks declined amid concerns the global economic recovery will be slow, boosting demand for the Japanese currency as a refuge.
Oil dropped on concern an increase in stockpiles in a key storage area in the U.S. shows fuel demand has yet to recover. It also dropped along with Asian equities ahead of a report from the U.S. Labor Department that is forecast to show unemployment in the world’s biggest energy user rose in October.
Crude oil for December delivery fell as much as 1 percent to $79.62 a barrel on the New York Mercantile Exchange before trading at $79.71 at 4:01 p.m. Tokyo time. Yesterday, the contract rose 1 percent to settle at $80.40, the highest close since Oct. 23.
Thai Output
Losses in rubber futures were limited after Thailand predicted a slump in natural rubber production, Sugata said.
Thailand’s output “will not be more than 2.5 million tons” this year compared with 3.1 million tons last year, Somchai Charnnarongkul said at a conference in Ho Chi Minh City yesterday. Production may drop to between 2 million and 2.5 million tons, he said.
Thailand, Indonesia and Malaysia, the three biggest producers, suspended a plan agreed last year to pare exports after the global economic recovery restored demand, the International Rubber Consortium said last month.
Stockpiles held from last year would mean Thailand should export about 2.7 million tons this year, Somchai said.
January-delivery rubber on the Shanghai Futures Exchange lost 0.8 percent to settle at 18,965 yuan ($2,778).
Source: Bloomberg