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Rubber retreated to a one-week low as a record decline in U.S. home sales and slowing Japanese export growth added to evidence that the global economy is faltering, raising concerns demand for the commodity may weaken.
Japan’s export growth slowed for a fifth month in July, adding to threats to an economy already under pressure from the yen’s surge to a 15-year high against the dollar. The figures came out after a report showed yesterday that sales of previously owned homes in the U.S. slumped 27.2 percent in July, more than double a Bloomberg survey’s forecast.
Slowing overseas shipments in Japan and lower-than-expected U.S. home sales are “important” factors dragging the rubber market lower, Hiroyuki Kikukawa, general manager of research at Tokyo-based IDO Securities Co., said in an e-mail statement.
January-delivery rubber fell as much as 1.4 percent to 284.3 yen per kilogram ($3,361 a metric ton) on the Tokyo Commodity Exchange, the lowest level since Aug. 18, and settled at 286.3 yen. The August-delivery contract, which will expire today, advanced 3.1 percent to settle at 338.3 yen.
Japan’s exports advanced 23.5 percent in July from a year earlier, less than June’s 27.7 percent gain, the Finance Ministry said today. Exports fell 1.4 percent from a month earlier, the third monthly drop.
Today’s report adds to signs that Japan’s export-fueled rebound is losing steam after gross domestic product in the second quarter grew at the slowest pace this year. The yen’s advance is also threatening earnings of companies like Toyota Motor Corp. and Sony Corp., putting pressure on policy makers to curb the currency’s 9 percent appreciation this year.
Downside Limited
The U.S. National Association of Realtors reported yesterday that sales of existing homes plunged at a record pace of 27 percent in July after a revised 7.1 percent reduction in the previous month. The median forecast of 74 economists in a Bloomberg News survey was for a 13.4 percent drop.
“Bearish economic data has a psychological effect on the market, raising worries demand for rubber may slow,” Chaiwat Muenmee, an analyst at Bangkok-based DS Futures Co., said by phone today.
Price declines were limited as the yen retreated from a 15- year high against the dollar amid speculation the government may act to stem its rally, raising the appeal of yen-based contracts, Kikukawa said.
The yen declined after Japanese Finance Minister Yoshihiko Noda said he was prepared to take appropriate action on the currency when necessary. The yen fell to 84.54 yen per dollar from 83.90 yesterday, when it reached 83.60, the highest since June 1995.
“Supply remains low as rainfall continues in southern Thailand, providing support to rubber prices,” Chaiwat said.
In the cash market, Thai rubber prices fell 0.7 percent to 104.8 baht ($3.33) per kilogram, the Rubber Research Institute of Thailand said on its website today.
January-delivery rubber on the Shanghai Futures Exchange advanced 1.5 percent to close at 24,845 yuan ($3,655) a ton.
Source: Bloomberg