May 24 (Bloomberg) — Rubber advanced for a second day to two-week high as a drop in China’s stockpiles raised speculation that the biggest consumer may increase purchases and as the cash price in Thailand climbed on low supply.

Futures in Tokyo climbed as much as 4.8 percent, extending last week’s 1.7 percent gain, the best performance in five weeks. The price recovered after slumping to a five-month low of 250.9 yen per kilogram ($2,790 a metric ton) on May 17 amid concern that Europe’s sovereign debt crisis may stall economic growth.

Natural rubber stockpiles monitored by the Shanghai Futures Exchange dropped 2,536 tons to 27,363 tons, the bourse said May 21. It was the lowest level since July 2008. In Thailand, the largest exporter, prices on the physical market rose on limited supply and strong local demand, the Rubber Research Institute of Thailand said on its website.

“Low supply in China and a strong cash price in Thailand gave support to the price of rubber futures,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone.

Rubber for October delivery, the most-active contract, gained as much as 12.7 yen to 279.4 yen on the Tokyo Commodity Exchange, the highest level since May 6, before settling at 277.2 yen. The May-delivery rubber contract, which expires tomorrow, rose 2.7 percent to settle at 377.8 yen.

Cash prices in Thailand advanced as drought lowered latex production, limiting supplies, while demand from local processers remains strong, the Rubber Research Institute of Thailand said on its website today.

Thai RSS-3 grade rubber for June delivery gained 2.1 percent to 120.85 baht ($3.73) a kilogram, excluding freight and insurance, the institute said.

September-delivery rubber on the Shanghai Futures Exchange added 2.4 percent to settle at 22,020 yuan ($3,225) a ton.

Source: Bloomberg

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