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Rubber, set for a fifth monthly gain, climbed as a weakening Japanese currency and limited supply in Thailand, the largest shipper, improved the appeal of the commodity used to make tires and gloves.
May-delivery rubber on the Tokyo Commodity Exchange rose as much as 2.6 percent to 366.4 yen per kilogram ($4,353 a metric ton) before settling at 360.2 yen. The most-active contract, which reached a 30-year high of 383 yen on Nov. 11, surged 10.2 percent this month, the biggest advance since December.
The dollar is poised for its first monthly gain since April against the yen on speculation the U.S. economic recovery is picking up and as tension on the Korean peninsula intensifies. Wet weather in southern Thailand continues to cut supply, boosting prices, according to the Rubber Research Institute of Thailand. The south accounts for about 80 percent of production.
“The weakening tone of the yen and higher crude oil prices continue to support rubber,” said Varut Rungkhum, analyst at commodity broker Agro Wealth Ltd. “Persistent rainfall is likely to worsen the low supply situation in Thailand,” he said by phone today from Bangkok.
Supply from the Association of Natural Rubber Producing Countries, which accounts for about 92 percent of global output, may drop 3.8 percent in the three months to Dec. 31 as rains have disrupted tapping in Thailand, the group said on Nov. 25.
Output from Thailand is estimated to tumble by 28 percent during October-to-December period, which will lower production this year by 1.4 percent to 3.12 million tons, the group said.
The cash price of natural rubber in Thailand was unchanged at 131.55 baht ($4.35) per kilogram today. Auctioned prices of ribbed smoked sheets rose 0.4 percent to 123.45 baht, boosted by a weakening yen and a supply shortage, the Rubber Research Institute of Thailand said today on its website.
Limited Gains
Futures in Shanghai fell as much as 3.8 percent to 29,500 yuan ($4,425) a ton before closing 0.8 percent higher at 30,880 yuan. The contract, which reached a record on Nov. 11, is set for the fifth monthly advance.
Gains were limited on concern that the European debt crisis will spread and speculation that China will raise interest rates, Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co. said by phone from Bangkok.
European governments’ 85 billion-euro ($111 billion) bailout package for Ireland failed to quell market turmoil, menacing the euro as stocks, bonds and the currency declined.
China’s recent increases in the reserve requirement ratio for banks won’t be enough to reverse excessive liquidity in the system, Zhong Jiyin, an economist with the Chinese Academy of Social Sciences, wrote in a commentary in the China Daily today. China needs to raise interest rates by another 200 basis points, or 2 percentage points, to curb inflation given existing excess liquidity, Zhong wrote.
Source: Bloomberg