Rubber gained for a third day to the highest price in almost five months after the Federal Reserve said it may ease monetary policy further to spur growth, boosting the demand outlook for the commodity used in tires.
Futures in Tokyo advanced as much as 2 percent to 311.5 yen per kilogram ($3,669 a metric ton), the highest level since April 28. The price jumped 3 percent yesterday, the largest gain in two months, on expectations that the global market is set for the worst shortage in four years next year.
The Federal Open Market Committee said yesterday that it is “prepared to provide additional accommodation if needed to support the economic recovery.” The dollar weakened and gold climbed to a record for a fifth day on speculation Chairman Ben S. Bernanke will purchase additional U.S. government securities in the coming months in a bid to lower long-term interest rates.
“The statement boosted speculation that the Fed may ease monetary policy further to support the economy, which is positive for commodities,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.
February-delivery rubber rose as much as 6.1 yen, before settling at 309.7 yen on the Tokyo Commodity Exchange.
“The Fed’s remarks spurred optimism that demand for the rubber may grow,” said Sureerat Kunthongjun, an analyst at Agrow Enterprise Ltd. “Supplies remain limited in top producing nations as rains disrupted tapping, lowering production,” she said by phone from Bangkok.
Heavy Rains
The cash price in Thailand, the largest exporter, advanced for a third day, rising 0.7 percent to 108.35 baht ($3.54) per kilogram as rains continue in the country’s main plantation areas, limiting supply availability, the Rubber Research Institute of Thailand said on its website today. Some companies accelerated purchases to ensure they meet delivery commitments, the institute said.
Drought earlier this year followed by heavy rains have hampered tree-tapping across plantations in Asia, according to Pongsak Kerdvongbundit, managing director of Phuket, Thailand- based Von Bundit Co.
Persistent rains will probably continue across the country in the second half of September, the Thai weather office said on its website.
Natural-rubber consumption will outpace supply by 127,000 tons next year, the widest production deficit since 2007, according to Goldman Sachs Group Inc. Stockpiles will drop 12 percent to 67 days of demand in 2011, the lowest level in at least 11 years, the bank estimated in a report this month.
“While supply remains tight throughout this year, the possibility of change is remote in 2011 also,” Jom Jacob, senior economist at the Association of Natural Rubber Producing Countries, said in a monthly statement yesterday.
The Shanghai rubber market is closed today for a holiday. The March-delivery contract advanced to 26,920 yuan ($4,024) a ton yesterday, the highest level since July 2008.
(bloomberg.com)
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