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Rubber advanced for a second day, climbing to a record as heavy rains in the south of Thailand, the world’s biggest exporter, increase concerns over tightening supply amid an improving outlook for demand. The cash price extended gains to an all-time high.
May-delivery rubber on the Tokyo Commodity Exchange gained as much as 0.9 percent to an all-time high of 400.4 yen a kilogram ($4,773 a metric ton) and settled at 398.6 yen. The most-active contract advanced 4.4 percent this week, the most since week of Nov. 5.
The northeast monsoon is heading toward the Gulf of Thailand and southern Thailand, causing further heavy rains across the region, the Thai Meteorological Department said on its website today. Persistent rains across Thailand, Indonesia and Malaysia, the top three producers, have disrupted tapping and lowered output amid robust demand from rising car sales in China and India.
“Worries over limited supply from key producers in Southeast Asia are fueling gains,” Chaiwat Muenmee, analyst at DS Futures Co., said by phone from Bangkok. “U.S. economic data is also providing optimism that demand will continue to grow,” he said.
Applications for jobless insurance payments fell by 3,000 to 420,000, the lowest level in three weeks, U.S. Labor Department figures showed today. Economists surveyed by Bloomberg News projected an increase in claims to 425,000, according to a median forecast.
The cash price in Thailand, the world’s largest producer and exporter, extended a rally to an all-time high of 141.55 baht ($4.70) per kilogram, fueled by a supply shortage amid strong demand from local and overseas buyers, according to the Rubber Research Institute of Thailand.
Wintering Season
“Despite high prices, demand remains strong from China, India and Japan,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said by phone from Bangkok.
May-delivery rubber in Shanghai gained as much as 3.4 percent to 36,245 yuan ($5,442) a ton before closing at 36,145 yuan. The contract climbed to a record 38,920 yuan on Nov. 11.
Rubber futures may extend gains and climb to 480 yen by June as plantations in Thailand and Indonesia enter their low- production season known as wintering, said Makoto Sugitani, senior director at Newedge Japan Inc.
“Rubber is set to advance early next year,” said Sugitani, who correctly predicted in September that prices would rally to a record. End users will probably rush to buy rubber while it is available before output plunges during wintering, he said in an interview. Wintering runs from February to April.
Global demand for natural and synthetic rubber is forecast to increase by 15.3 percent this year to 24.3 million metric tons, according to the International Rubber Study Group. Consumption worldwide is expected to expand by 6.3 percent next year, it said. Natural-rubber supply is estimated at 10.2 million tons this year, the group said.
In the longer term, global rubber consumption is forecast to reach 33.9 million tons by 2020, with natural rubber production of 15.4 million tons, driven largely by strong growth in emerging markets, the group said.
Source: Bloomberg