Rubber Futures Decline to One-Week Low as Crude Oil Drops, Yen Strengthens

Rubber declined for a second day as lower oil prices and a strengthening Japanese currency hurt demand for the commodity amid concern that the global economic recovery may falter. Thai supplies also gained.

The most-active contract in Tokyo fell as much as 1.4 percent to the lowest in a week, heading for a second weekly drop. The yen rose against the dollar after Federal Reserve Chairman Ben S. Bernanke said yesterday that the U.S. economic outlook remains “unusually uncertain,” boosting demand for Japan’s currency as a refuge.

A “declining crude oil price and stronger yen damped market sentiment,” Varut Rungkhum, an analyst at commodity broker Agro Wealth Ltd., said by phone from Bangkok. Gains in the Japanese currency cut the appetite for yen-based contracts.

The yen climbed against all of its 16 major counterparts as Bernanke that said policy makers are prepared to act as needed to aid economic growth, adding to traders’ bets that the U.S. central bank will keep interest rates near zero.

December-delivery rubber fell as much as 3.8 yen to 259.7 yen per kilogram ($2,999 a metric ton), the lowest level since July 14, before trading at 260.4 yen on the Tokyo Commodity Exchange at 11:16 a.m. local time. July-delivery rubber gained 0.9 percent to 355.3 yen, after rising 2.2 percent yesterday.

November-delivery rubber on the Shanghai Futures Exchange was little changed at 21,770 yuan ($3,211) a ton.

Oil for September delivery fell to as much 0.3 percent to $76.30 a barrel after an Energy Department report showed U.S. crude inventories climbed 360,000 barrels to 353.5 million last week. Lower oil prices make natural rubber less attractive against rival synthetic products made from petroleum.

Natural-rubber “supplies from southern Thailand have improved as rainfall declined, and this also put pressure on rubber prices,” Varut said.

The Thai cash price was quoted at 104.65 baht a kilogram yesterday, unchanged from July 20, the Rubber Research Institute of Thailand said on its website. Prices are updated in the afternoons.

(bloomberg.com)