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June 17 (Bloomberg) — Rubber declined for the first time in six days as a stronger Japanese currency reduced the appeal of yen-denominated contracts and output in major producing countries increased.
Futures in Tokyo dropped after reaching a two-week high yesterday. The yen advanced amid concern that Europe’s debt crisis will impair the region’s economic recovery, boosting demand for Japan’s currency as a refuge.
Natural rubber output in Malaysia, the world’s third- largest grower, may surge 17 percent this year as rising prices prompt farmers to increase tapping, offsetting crop damage from drought, the Malaysian Rubber Board said. Supply from Thailand, the largest producer and exporter, will increase seasonally, said Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo.
“Output in Thailand has been growing, leading to increased shipments by Thai exporters,” Sugata said by phone today. Rising supply put a drag on rubber futures, he added.
November-delivery rubber lost as much as 3.8 percent to 275.0 yen a kilogram ($3,016 a metric ton) before settling at 275.3 yen on the Tokyo Commodity Exchange.
Natural rubber production this year may climb to as much as 1 million metric tons, Salmiah Ahmad, director general of the Malaysian board, said in an interview. That is more than the 900,000 tons forecast by the nation’s Plantation Industries and Commodities Ministry in May. Output last year was 856,189 tons.
Recovery May Slow
Futures also declined as a drop in U.S. housing starts raised concerns that the economic recovery may slow, weakening demand for the commodity used in tires.
Asian equities decreased after a U.S. Commerce Department report showed housing starts slumped 10 percent in May, the biggest drop since March 2009.
“Uncertainty about the economic outlook sapped investor interest in the commodity,” Sugata said.
November-delivery rubber reached 286.7 yen yesterday, the highest level since June 1, after a report showed New York-area manufacturing expanded for an 11th month. The price dropped to a three-week low of 253.6 yen on June 9.
The yen strengthened against all 16 major counterparts on speculation European Union leaders will discuss ways to tighten financial-market regulation. The euro fell for a second day versus the dollar after Spain’s central bank said it plans to publish the results of stress tests carried out on the nation’s lenders in order to quell speculation that it needs international aid.
November-delivery rubber on the Shanghai Futures Exchange lost 1.7 percent to 21,455 yuan ($3,141) a ton. The market resumed trade today after a three-day public holiday.
Source: Bloomberg