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Rubber dropped for a third day as falling crude oil prices and concerns that the global economy is slowing cut the appeal of yen-based contracts.
Futures in Tokyo decreased as much as 1.2 percent, extending a retreat from a three-month high of 295.2 yen per kilogram ($3,474 per metric ton) reached on Aug. 20.
The yen advanced against most major counterparts before data this week forecast to show the U.S. housing market slowed and German business confidence fell. Rubber futures also weakened as oil decreased for a fifth day, cutting the cost of making rival synthetic products used in tires.
“The market stayed under pressure as risk appetite from investors waned because of concerns about the economy,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.
January-delivery rubber declined as much as 3.5 yen to 285.8 yen per kilogram before settling at 288.3 yen.
“Concerns over the global economy and the yen encouraged selling,” Yasuhisa Sugimoto, manager for global marketing at Okato Shoji, said by phone from Tokyo.
The yen advanced to 84.86 per dollar from 85.16 yesterday. Japan’s currency touched 84.73 per dollar on Aug. 11, the highest since July 1995, on demand for safer assets.
Sales of existing U.S. homes dropped 13 percent to a 4.65 million annual rate in July, according to the median estimate of economists in a Bloomberg News survey ahead of the National Association of Realtors report today. U.S. new-home sales held at an annual pace of 330,000 in July, according to another Bloomberg survey before tomorrow’s data.
‘Double-Dip’ Concern
“Even though we don’t think the U.S. is moving into a recession, there are concerns about a double dip,” said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co.
In the cash market, Thai rubber prices were unchanged for the fourth day at 105.5 baht ($3.35) per kilogram, the Rubber Research Institute of Thailand said on its website today. Continued strength in the Japanese currency weighed on market sentiment, but demand from China to replenish its stockpiles helped cushioned the downside, the institute said.
The market is supported by concern that rains in southern Thailand, the largest producer, may disrupt tapping and curb supply, Sugata said.
Tropical Storm Mindulle has developed in Vietnam and is expected to move west, causing heavy rainfalls across Thailand and possibly resulting in floods, the Thai Meteorological Department said on its website today.
January-delivery rubber on the Shanghai Futures Exchange retreated 2.4 percent to close at 24,485 yuan ($3,602) a ton.
Source: Bloomberg