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Rubber extended its rally to a record after data showed improvement in the U.S. economy, boosting expectations demand will expand for the commodity used in tires. The cash price in Thailand climbed to an all-time high.
June-delivery rubber climbed to 440.8 yen a kilogram ($5,308 a metric ton) on the Tokyo Commodity Exchange in after- hours trading. Trading in this session will be settled Friday. The most-active contract has increased 6.3 percent this week, extending last year’s advance of 50 percent.
Japanese stocks climbed and the yen weakened against the dollar after higher-than-estimated growth in U.S. payrolls and service industries bolstered optimism in the world’s largest economy. The data also boosted oil prices above $90 a barrel, raising the appeal of natural rubber as an alternative to synthetic products made from petroleum.
“Strong U.S. data and a weakening yen support the rally of rubber to a new high,” Ker Chung Yang, an analyst with Phillip Futures Pte, said by phone from Singapore. “Stockpiles in Japan have depleted raising concerns of supply shortage,” he said.
Crude rubber stockpiles held at Japanese warehouses fell 2.7 percent to 6,316 tons on Dec. 20, according to data from the Rubber Trade Association of Japan.
China’s natural-rubber inventories were at 66,515 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Dec. 31. That was 56 percent lower than last year’s high of 151,832 tons.
“Tight fundamentals continue to boost rubber futures,” said Kazunori Kokubo, general manager at the international business section of commodity broker Yutaka Shoji Co. in Tokyo. “I don’t see any factors to sell them at the moment as buyers keep purchasing the commodity, regardless of the price rally.”
Supply Limited
“Buyers, especially from China and Japan, have accumulated the commodity before Thailand halts tapping activities during low-production season,” Navarat Kaewpratarn, marketing official at Future Agri Trade Co., said by phone today from Bangkok.
Growers in Thailand, the largest exporter, will cut tapping from February to April during the so-called wintering period. The seasonal drop in output may worsen a supply shortage as global demand keeps rising, led by car sales in China and India.
The Thai cash price extended a rally to a record 158.05 baht ($5.22) per kilogram as persistent rain in southern provinces lowered production amid strong demand ahead of Chinese New Year holidays and the low-production period, according to the Rubber Research Institute of Thailand.
U.S. Growth
The U.S. Institute for Supply Management said yesterday that its non-factory index, which covers about 90 percent of the economy, rose to 57.1 in December, exceeding the median forecast of economists surveyed by Bloomberg News and the fastest expansion since May 2006.
ADP Employer Services said yesterday that U.S. companies added 297,000 jobs last month, almost triple the median economist estimate.
The dollar gained the most in three months against the yen yesterday in New York, advancing to as much as 83.38, the highest level since Dec. 23. A weaker Japanese currency raises the appeal of yen-denominated contracts as rubber trades globally in the dollar.
Rubber futures in Shanghai gained as much as 2 percent to 38,850 yuan ($5,866) per ton the highest level since Nov. 11 before closing at 38,365 yuan.
Source: Bloomberg