Rubber Declines From Three-Month High, Poised for Weekly Gain

Aug. 20 (Bloomberg) -- Rubber declined for the first time in four days, falling from a three-month high, as the Japanese currency strengthened and higher-than-expected U.S. jobless claims raised concerns that demand may weaken.

The January-delivery contract retreated as much as 1.4 percent to 289.7 yen a kilogram ($3,389 a metric ton) on the Tokyo Commodity Exchange, before trading at 290.9 yen at noon local time. The contract is poised for the first weekly gain since Aug. 6.

“A series of bearish economic data from the U.S. raised concerns that a global economic slowdown will take place in the second half of this year and next year, weakening demand,” said Chaiwat Muenmee, an analyst at Bangkok-based DS Futures Co.

The yen is set for a weekly gain versus 15 of its 16 major peers after U.S. reports yesterday showed jobless claims increased to the highest level since November and an index of Philadelphia-area manufacturing fell. The Japanese currency rose to 85.19 a dollar, from 85.39 yesterday.

Initial jobless claims rose by 12,000 to 500,000 in the week ended Aug. 14, a U.S. Labor Department report yesterday showed. Claims exceeded all estimates of economists surveyed by Bloomberg News and compared with the median forecast of 478,000.

The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 7.7 this month, the lowest reading since July 2009. Readings below zero signal contraction.

January-delivery rubber in Shanghai slumped 1.3 percent to 25,480 yuan ($3,753) a ton, and was still set for a fifth- straight weekly gain.

“The market downside will be cushioned by limited supply as rainfall continues in southern Thailand,” Chaiwat said.

Heavy rain is expected across Thailand, the largest producer, this week and next, according to the Thai Meteorological Department. In Indonesia, rains are forecast in Sumatra, Kalimantan and parts of Sulawesi and Java this month and next, the Climatology and Geophysics Agency said on Aug. 11.

Cash prices in Thailand gained 0.5 percent yesterday to 105.5 baht ($3.34) per kilogram as limited supply came onto the market after the rain, according to the Rubber Research Institute of Thailand.  

(bloomberg.com)