Rubber Drops Most in 7 Months as Commodities Slump on Goldman

April 19 (Bloomberg) -- Rubber slumped by the most in seven months after U.S. securities regulators accused Goldman Sachs Group Inc. of fraud, sapping investor demand for assets ranging from stocks to metals.

Futures in Tokyo lost 6.3 percent today, the biggest one- day drop since Sept. 14. The price declined to the lowest level since April 1 after reaching a 21-month high of 338.5 yen per kilogram ($3,673 a metric ton) on April 16.

Gold and other commodities including oil tumbled after the regulators filed the suit against Goldman Sachs, one of Wall Street’s biggest traders and brokers of raw materials. The Japanese currency rose to the highest level since March against the dollar, cutting the appeal of yen-based contracts.

“Rubber tracked losses in other commodities as the news about Goldman caused risk-aversion,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone.

Rubber for September delivery lost 21.1 yen to settle at 313.1 yen per kilogram on the Tokyo Commodity Exchange. The price decreased for a second day.

The Securities and Exchange Commission alleged that Goldman created and sold securities linked to subprime mortgage-backed securities. The firm failed to disclose to investors that hedge fund Paulson & Co. was betting against the instruments and influenced the selections in the portfolio, the SEC said. Paulson wasn’t accused of wrongdoing.

Largest Brokerage

As of Feb. 28, Goldman was the largest commodity brokerage by adjusted net capital, the minimum needed to meet the requirements set by the Commodity Futures Trading Commission, according to data from the agency.

“The Goldman shock is discouraging investors from taking on risk in stocks, currencies and commodities,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co.

Rubber futures have gained 13 percent this year as China led a recovery in global economies from the worst postwar recession, boosting sales of cars and tires.

China’s gross domestic product expanded 11.9 percent in the first quarter from a year earlier, the statistics bureau said on April 15. That was the fastest pace in almost three years. The nation is the largest consumer of natural rubber.

A seasonal decline in rubber output in Thailand, the largest producer, also helped increase rubber prices by 4.5 percent so far this month, Shigemoto at JSC said.

Thailand is in a low-production period from February to April, known as wintering, when rubber trees shed their leaves and latex output slows. Shipments from the country will remain slow until early June, he said.

Expanding demand and declining supply drove China’s rubber stockpiles to the lowest level since July 2009 last week, Shigemoto said. Natural rubber inventories monitored by the Shanghai Futures Exchange plunged 9,802 tons to 48,979 tons, the bourse said on April 16, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin.

September-delivery rubber on the Shanghai Futures Exchange lost 3.2 percent to settle at 24,535 yuan ($3,594) a ton. Earlier it fell to 24,200 yuan, the lowest level since March 25.