Rubber dropped for a third day as a stronger Japanese currency cut the appeal of yen-based contracts and on concern that the global economy is slowing.
Futures in Tokyo decreased as much as 1.2 percent, extending a retreat from a three-month high of 295.2 yen per kilogram ($3,474 per metric ton) reached on Aug. 20.
The yen advanced against most major counterparts before data this week forecast to show the U.S. housing market slowed and German business confidence fell. Rubber futures also weakened as oil decreased for a fifth day, cutting the cost of making rival synthetic products used in tires.
“The market stayed under pressure as risk appetite from investors waned because of concerns about the economy,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.
January-delivery rubber lost as much as 3.5 yen to 285.8 yen per kilogram before trading at 288.3 yen on the Tokyo Commodity Exchange at 11:46 a.m.
The yen advanced to 85.03 per dollar from 85.16. Japan’s currency touched 84.73 per dollar on Aug. 11, the highest since July 1995, on demand for safer assets.
Sales of existing U.S. homes dropped 13 percent to a 4.65 million annual rate in July, according to the median estimate of economists in a Bloomberg News survey ahead of the National Association of Realtors report today. U.S. new home sales held at an annual pace of 330,000 in July, according to another Bloomberg survey before tomorrow’s data.
‘Double-Dip’ Concern
“Even though we don’t think the U.S. is moving into a recession, there are concerns about a double dip,” said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co.
In the cash market, Thai rubber prices were unchanged at 105.5 baht ($3.35) per kilogram, the Rubber Research Institute of Thailand said on its website yesterday.
The market is supported by concern that rains in southern Thailand, the largest producer, may disrupt tapping and curb supply, Sugata said.
Heavy rainfall is expected across Thailand this week as tropical storm Mindulle has developed, according to the Thai Meteorological Department.
January-delivery rubber on the Shanghai Futures Exchange lost 1.4 percent to 24,750 yuan ($3,639) a ton at 10:50 a.m. local time.
(bloomberg.com)
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