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Feb. 25 (Bloomberg) — Rubber retreated from a five-week high as a rally in the Japanese currency and falling crude oil prices reduced appetite for yen-based contracts.
Futures in Tokyo fell as much as 2.4 percent after reaching 303.4 yen per kilogram ($3,380 a metric ton) yesterday, the highest level since Jan. 20. It was the second decline this week.
Japan’s currency advanced for a fifth day on speculation Greece’s credit rating will be downgraded as the nation struggles with pushing through fiscal cuts demanded by the European Union. The yen is trading near its highest against the dollar since Feb. 10. Oil fell below $80 a barrel, reducing the appeal of natural rubber as an alternative synthetic product made from petroleum.
“A higher yen was the largest drag on the price of rubber,” Kazuhiko Saito, chief analyst at Tokyo-based broker Fujitomi Co., said today by phone. “There were no aggressive sellers as rubber looks fundamentally strong on demand recovery and seasonally tight supplies.”
Rubber for August delivery, the most-active contract, lost as much as 7.3 yen to 294.2 yen, before settling at 294.7 yen on the Tokyo Commodity Exchange.
“Oil prices, stocks and dollar-yen weaken, drove rubber prices lower,” Roka Komiya, trader at Marubeni Corp. said by phone from Tokyo. The market may fall further, he added.
Limited Supply
Crude oil for April delivery fell as much as 45 cents, to $79.55 a barrel in electronic trading on the New York Mercantile Exchange. It was at $79.61 a barrel at 2:38 p.m. Singapore time.
Thai rubber auction prices have risen for 12 days as worries over limited supplies accelerate purchases, mainly by Chinese buyers, the Rubber Research Institute of Thailand said on its Web site today.
The auction price of unsmoked sheets gained 0.7 percent to 101.42 baht ($3.07) per kilogram. Ribbed smoked sheets rose 0.7 percent to 106.16 baht a kilogram, according to the institute.
“Supplies are not so plentiful,” said Komiya. “Even though buyers offer to buy at high prices, it’s difficult to get.”
Thailand, the largest producer and exporter, is entering the low production season, reducing the raw material supply. Rubber trees shed leaves and latex output slows during the season, known as wintering, that normally begins in the nation’s main growing areas late March.
Thai shippers offered so-called RSS-3 grade rubber for April shipment at $3.27 a kilogram, compared with $3.25 yesterday, according to the institute’s website.
Thailand’s natural rubber production this year is estimated to fall to 3.1 million metric tons, compared with 3.33 million tons forecast earlier, because of dry weather caused by the El Nino weather event, Apichart Jongskul, secretary general of the Office of Agricultural Economics said Jan. 13
May-delivery rubber on the Shanghai Futures Exchange fell 0.3 percent to settle at 24,970 yuan ($3,658) a ton. It earlier rose to 25,450 yuan, the highest level since Jan. 21.
Source: Bloomberg