Rubber Futures Extend Rally as Oil Prices, Low Inventories Boost Appeal

Rubber climbed to a five-week high as declining inventories in Japan and rising crude oil prices enhanced the appeal of the commodity used to make tires.

Futures in Tokyo advanced as much as 2.3 percent to the highest level since June 28. The price extended last month’s 1.3 percent gain, the first increase in four months.

“Warehouse stocks in Japan are still very low, providing speculation buyers may soon build up inventories,” Kazunori Kokubo, general manager at commodity broker Yutaka Shoji Co., said today by phone from Tokyo. “That’s also why the nearby contract can’t come down,” he added.

Rubber stockpiles monitored by the Tokyo Commodity Exchange fell 22 percent to 1,042 metric tons as of July 20, data from the bourse showed. It was the lowest level since at least 2001, exchange spokesman Norikazu Takei said yesterday.

January-delivery rubber rose as much as 6.4 yen to 285.9 yen per kilogram ($3,305 a ton) before trading at 281.2 yen at 10:41 a.m. local time. August-delivery rubber gained as much as 1.9 percent to 316.7 yen.

“Rallies in oil prices and global equities markets are key factors boosting rubber,” Varut Rungkhum, analyst at commodity broker Agro Wealth Ltd., said today by phone from Bangkok.

Oil traded near a three-month high after breaching $81 a barrel for the first time since May as global equities advanced because of improved prospects for an economic recovery.

Asian stocks climbed, driving the MSCI Asia Pacific Index to a three-month high, after U.S. manufacturing data topped forecasts and European banks reported better-than-estimated earnings. The MSCI Asia Pacific Index rose 0.7 percent to 121.57.

January-delivery rubber on the Shanghai Futures Exchange climbed as much as 1.1 percent to 24,730 yuan ($3,651) a ton before trading at 24,460 yuan.

Thai supplies remain limited due to rainfall in the country’s southern provinces, a key rubber plantation area, the Rubber Research Institute of Thailand said on its website yesterday. The benchmark Thai cash price gained 0.2 percent to 104.15 baht ($3.23) a kilogram yesterday, the institute said.

(bloomberg.com)