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Rubber climbed for a third day, topping 300 yen per kilogram for the first time since April, as Japan’s central bank acted to stem the yen’s rally and on concerns over limited supply.
Futures in Tokyo gained as much as 1 percent to 302 yen a kilogram ($1,166 a metric ton), the highest level since April 30, extending last week’s 2.7 percent increase. The February- delivery contract settled at 299.5 yen on the Tokyo Commodity Exchange. The price has increased 8.5 percent this year.
The Bank of Japan expanded a bank-loan program, stepping up its monetary stimulus for the first time since March after the yen surged to a 15-year high and the government pressured the central bank to safeguard the recovery. The move follows signs the U.S. is also open to further monetary stimulus, with Federal Reserve Chairman Ben S. Bernanke saying three days ago that he has the tools to prevent another recession.
“The measures didn’t surprise the currency market, raising the possibility that the yen may strengthen,” Chaiwat Muenmee, analyst at Bangkok-based commodity broker DS Futures, said by phone today. “That’s why rubber closed off its high.”
The yen rose against the dollar, paring earlier gains in rubber, on speculation the Bank of Japan’s decision to increase credit-easing measures won’t be enough to weaken the Asian nation’s currency from near a 15-year high, reducing the appeal of yen-denominated contracts.
Yen Climbs
The Japanese currency climbed to 85.13 per dollar at 5 p.m. in Tokyo from 85.22 in New York last week, after earlier declining to 85.91, the weakest since Aug. 19.
January-delivery rubber on the Shanghai Futures Exchange gained 0.8 percent to close at 25,825 yuan ($3,797) a ton. China’s inventories shrank for the first week in five, dropping by 32 tons to 24,701 tons, the exchange said on Aug. 27, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin.
“A volcano in Indonesia may threaten supply availability, supporting rubber prices,” Varut Rungkhum, analyst at commodity broker Agro Wealth Ltd., said by phone from Bangkok. Indonesia is the second-largest rubber producer and exporter.
The Sinabung volcano on Sumatra island erupted on Aug. 29 for the first time in 400 years, spewing ash and volcanic materials and prompting the evacuation of surrounding areas.
Cash prices in Thailand surged 1.4 percent to 107.35 baht ($3.43) per kilogram, boosted by increasing demand from local and overseas processors following robust car sales growth, the Rubber Research Institute of Thailand said today on its website. Rains have disrupted tapping, limiting supplies, it said.
Source: Bloomberg