April 30 (Bloomberg) — Rubber headed for its worst monthly performance since September as most investors unwound positions before holidays in Japan next week amid speculation that supply will improve as the annual low-output season ends.

Futures in Tokyo fell as much as 1.3 percent to 301.7 yen a kilogram ($3,211 a metric ton) after rising as much as 1.3 percent earlier. The most-active contract dropped for a third day, extending April’s loss to 2.1 percent.

“There will be position-squaring by investors ahead of the long holidays,” said Hiroyuki Kikukawa, general manager of research at Tokyo-based IDO Securities Co.

The Tokyo rubber futures market, which was closed yesterday for a public holiday, will be closed from May 3 to May 5 for the Golden Week holiday and resume trading on May 6.

Supply in key producing countries is expected to improve as the wintering season, when trees shed leaves and latex output slows, typically finishes at the end of April. “Supply will slowly improve,” said Felix Yeo, a trading manager at the Singapore unit of Marubeni Corp.

October-delivery rubber, the most-active contract on the Tokyo Commodity Exchange, declined 1.3 percent to 301.9 yen per kilogram as of 12:55 p.m. Singapore time.

Rubber futures have gained 9.5 percent this year and reached a 21-month high of 338.5 yen on April 16 as the global economy recovered from the worst postwar recession, boosting raw material demand. The market was also supported by a seasonal decrease in supply from Thailand, Malaysia and Indonesia, the three biggest producers.

The free-on-board price, which excludes freight and insurance, of Thai RSS-3 grade rubber for May delivery remained unchanged at 129.55 baht ($4.01) per kilogram today, according to the Rubber Institute of Thailand. It touched a record 130.55 baht on April 28.

September-delivery rubber on the Shanghai Futures Exchange declined 0.6 percent to 23,295 yuan ($3,412) a ton.

Source: Bloomberg

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