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Rubber advanced to a record for a second straight day as rain curbed production in Thailand, the world’s largest exporter, and on speculation China may delay boosting interest rates, sustaining its raw-material demand. The cash price in Thailand also surged to an all-time high.
May-delivery rubber on the Tokyo Commodity Exchange climbed as much as 2.9 percent to 410.3 yen a kilogram ($4,889 a metric ton) before settling at 408.8 yen. The price has climbed 48 percent this year.
Persistent rains across Thailand, Indonesia and Malaysia, the top three producers, have disrupted tapping and lowered output amid demand from rising car sales in China and India. The supply shortage is expected to worsen as the low-production season starts in Thailand early next year, said Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo.
“The market looks bullish on declining supply,” Shigemoto said by phone today. “Futures also gained on speculation that China won’t raise interest rates this year.”
China’s stocks rose, driving the benchmark index higher for the first time in four days, on speculation that U.S. economic growth is accelerating and the Chinese central bank may delay boosting interest rates as prices ease.
China’s Central Bank Governor Zhou Xiaochuan said the government will take stock market moves into consideration when making policies. China increased interest rates in October for the first time since 2007 as inflation reached 4.4 percent on an annual basis, the highest since September 2008. Since then, the central bank has raised reserve requirements for lenders three times in five weeks. The last increase was on Dec. 10.
Interest Rates
Zhou’s “comments gave some signals that China may not raise interest rates immediately, or as soon as the investors had expected,” said Zhang Kun, a strategist at Guotai Junan Securities Co. in Shanghai.
May-delivery rubber in Shanghai gained as much as 4.7 percent to 37,855 yuan ($5,677) a ton, the highest level since Nov. 11, when the price climbed to a record 38,920 yuan. The contract closed at 37,320 yuan.
The contract had dropped to a seven-week low of 29,500 yuan on Nov. 30 amid concern that China may increase interest rates to curb inflation, weakening demand from the largest consumer.
China’s stocks may rise until the Lunar New Year holiday in February, as inflation is likely to ease “significantly” in December because of declining vegetable prices, according to China International Capital Corp.
Thai Record
The cash rubber price in Thailand extended a rally to a record 144.05 baht ($4.77) per kilogram today, gaining 1.8 percent from Dec. 17, the Rubber Research Institute of Thailand said on its website today. Local and overseas buyers, in particular China, continue buying to build up inventories ahead of New Year holidays and the low-production season, it said.
“Unfavorable weather conditions prompted buyers from China, India and Japan to accelerate purchases to secure supplies,” Sureerat Kunthongjun, an analyst at Bangkok-based commodity broker Agrow Enterprise Ltd., said by phone today.
The dollar advanced against the yen today before reports this week that economists say will show the U.S. gross domestic product expanded more than previously estimated and personal spending climbed. A weaker Japanese currency also raised the appeal of yen-denominated rubber contracts.
The U.S. economy expanded 2.8 percent in the third quarter from a year earlier, quicker than the 2.5 percent estimate published last month, the Commerce Department may say on Dec. 22, according to a Bloomberg News survey of economists. Spending by U.S. consumers rose 0.5 percent in November after a 0.4 percent increase in October, a separate Bloomberg survey showed before a Dec. 23 report.
Source: Bloomberg