Asian rubber settled sharply higher Monday as the Association of National Rubber Producing Countries painted a bullish picture amid tight supply and investors also took leads from strong crude oil and a weaker yen.
Physical prices of the Thai USS3 raw material rose above THB87 a kilogram as supply shrunk below 50 metric tons. During this time of the season, supply is usually above 200 tons.
The benchmark June RSS3 contract on the Tokyo Commodity Exchange settled Y8.0 higher at Y284.0/kg after reaching an intraday high of Y285, a level not seen since late September 2008.
Prices rose further during the night session, with the June contract ending at Y286.2. Night session prices aren't included in intraday trading.
January-October natural rubber output in major producing regions is estimated down 9% on year, ANRPC said in its latest report.
The report said supplies continue to be tight because of heavy rains, and floods in Southeast Asia in November, according to an exporter in Singapore.
He said Tocom rubber futures will likely reach Y300/kg this month.
Production in all major producing countries except China is estimated lower on year. ANRPC said production was also lower in November though figures for the month aren't available so far for Thailand and Indonesia.
"The falling trend in the supply of natural rubber accelerated, according to data available up to November," ANRPC noted in its latest report.
Production in Thailand, the world's largest producer, is estimated 9.6% lower on year during the January-October period. Exports are estimated 8.4% lower on year.
There has been a lot of buying by institutional funds, which took cues from crude oil hovering around $80 a barrel, said a Tokyo-based broker with Okachi Corp.
He said the U.S. dollar rising above Y93 also provided support to rubber prices. Most traders put immediate resistance at Y286.5, then Y290.
In other news, natural rubber exporters in Thailand said they will ship out cargoes to South Korea's Kumho Tire Co. only if banks provide a guarantee of credit.
Shares of Kumho were suspended Monday following rumours of a debt default, but main creditor Korea Development Bank refuted this, saying its debts have been frozen as part of a debt workout program.
"We will ship out cargoes (to Kumho) only if they can open a line of credit," said Pongsak Kerdvongbundit, managing director of Von Bundit Ltd., one of Thailand's biggest producers of natural rubber.
He added once a line is opened, the bank concerned has to guarantee payment for the natural rubber cargoes.
The new benchmark May contract on the Shanghai Futures Exchange settled 0.9% higher at CNY24,585/ton.
The benchmark August contract on the Agricultural Futures Exchange of Thailand settled THB2.05 higher at THB100.45/kg.
Asian physical rubber prices were higher tracking gains in futures, tight supply and strong demand. Thai STR20, a premium grade, was sold at $2,960/ton, free on board Bangkok, for February shipment, said a trader in Phuket. Local sale of RSS3 to Thai companies was at THB97,000/ton on delivered at factory basis.
(Source: irco.biz)
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