Rubber Fluctuates as Stronger Yen Cuts Appeal, Rain Caps Supply

By Aya Takada

July 7 (Bloomberg) -- Rubber fluctuated as the Japanese currency advanced against the dollar, paring the appeal of yen- based contracts, and rain disrupted output in Thailand, limiting supply from the world’s largest exporter.

Futures gave up gains of as much as 1.5 percent as Asian stocks dropped after American service industries expanded at a slower pace than expected. The dollar traded near a seven-month low against the yen on speculation a Federal Reserve official speaking today will stress the need to keep interest rates near zero amid signs the U.S. recovery is slowing.

“The weak economic data from the U.S. sapped investor appetite for the futures,” said Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co.

The December-delivery contract lost 0.1 yen to 268 yen per kilogram ($3,063 a metric ton) at 11:47 a.m. local time on the Tokyo Commodity Exchange after moving between 267.3 yen and 272.2 yen.

The dollar traded at 87.49 yen as of 12:03 p.m. in Tokyo from 87.52 yen in New York yesterday, after falling to 86.97 on July 1, the lowest level since Dec. 2. The MSCI Asia Pacific Index lost 0.8 percent to 112.93, the first drop in three days.

The benchmark price in Thailand was unchanged yesterday at 112.60 baht ($3.47) a kilogram, according to the Rubber Institute of Thailand, which issues new data in the afternoon.

Tight global supplies and strong demand, especially from China, will support prices, the Association of Natural-Rubber- Producing Countries said in its June newsletter. China’s gross imports of natural rubber is projected to climb 5 percent this year to 1.67 million tons, the group said.

The possibility of a “marked improvement” in supply in the short term is limited given aging trees and weather constraints, the association said June 30. Rain in southern Thailand has disrupted plantation work in the major-growing region, according to the institute.

November-delivery rubber on the Shanghai Futures Exchange added 0.9 percent to 21,710 yuan ($3,203) a ton at 11:11 a.m. local time.

(bloomberg.com)