Rubber Reaches Five-Week High as Stockpiles in Japan Decline

By Aya Takada and Supunnabul Suwannakij

Aug. 2 (Bloomberg) -- Rubber advanced to a five-week high after data showed stockpiles in Japan dropped to the lowest level in at least nine years, raising speculation that investors betting on a price drop may buy the commodity back.

Futures in Tokyo climbed as much as 2.7 percent to the highest level since June 29. The price extended last month’s 1.3 percent gain, the first increase in four months.

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 today by phone.

“Tight supplies spurred a short-covering rally,” Kazuhiko Saito, analyst at Tokyo-based broker Fujitomi Co., said today by phone. Speculators with short, or sell, positions in the nearby contract must buy them back by its expiry, unless they can deliver the raw material.

January-delivery rubber rose as much as 7.3 yen to 280 yen per kilogram ($3,236 a ton) on the Tokyo exchange before trading at 279.1 yen at 2:24 p.m. local time.

August-delivery rubber gained as much as 2.2 percent to 310.4 yen. Last month, the July contract expired at 400 yen with physical delivery of 8 lots, or 40 tons, Takei said.

Rubber futures also advanced as a rally in Asian stocks boosted investor confidence in the economic recovery, Saito at Fujitomi said. The MSCI Asia Pacific Index added 1.1 percent to 120.42 as companies from Honda Motor Co. to Hyundai Mobis Co. reported higher earnings or forecasts.

Weaker Yen

The yen weakened versus all of its 16 major counterparts after Australia’s manufacturing growth accelerated in July and South Korea’s exports increased for a ninth month, raising the appeal of yen-denominated contracts.

“Growth in Asian economies looks solid,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “This is supportive of equities and risk-taking appetite.”

January-delivery rubber on the Shanghai Futures Exchange surged as much as 3.8 percent to 24,875 yuan ($3,673) a ton before trading at 24,705 yuan at 1:31 p.m. local time.

In the cash market, the benchmark Thai price gained 0.5 percent to 103.9 baht ($3.22) a kilogram, the Rubber Research Institute of Thailand said on July 30. Supplies in the country, the world’s largest producer and exporter, are likely to improve as rainfall is expected to subside, according to the institute.

(bloomberg.com)