Rubber in Tokyo climbed to a 27- month high while futures in Shanghai surged to a record amid speculation that economic growth in China, the largest consumer, will boost demand for the commodity used in tires.
The most-active contract on the Tokyo Commodity Exchange gained as much as 2.2 percent to 342.4 yen per kilogram ($4,212 a metric ton), the highest level since July 2008, before trading at 340.4 yen at 12:04 p.m. Rubber in Shanghai surged as much as 2.3 percent to a record 31,370 yuan ($4,712) a ton before trading at 31,145 yuan.
China’s passenger-car sales to dealerships quickened in September as incentives boosted purchases. The nation’s foreign- exchange reserves increased by a record to $2.65 trillion at the end of last month, while a 25 percent jump in exports lifted its trade surplus to $16.9 billion, reinforcing optimism that the Asian country will continue to lead the global recovery.
“The data from China showed the strength of the nation’s economy, boosting speculation their raw material demand will continue to expand,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.
Rubber futures also gained as commodities rallied amid speculation that the Federal Reserve may loosen its monetary policy further to support economic recovery, sending the U.S. currency lower and boosting the appeal of commodities as an alternative asset, Sugata said.
The Reuters/Jefferies CRB Index of commodities gained 1.2 percent to the highest level since October 2008 yesterday, as gold rallied to a record on investment demand.
Dollar Falls
The dollar fell to its weakest since January against the euro before reports likely to fuel speculation the Federal Reserve will ease policy further to support prices.
The Dollar Index, which tracks the greenback against the currencies of six major trading partners, reached a 10-month low before a Labor Department report forecast to say gains in U.S. wholesale costs and consumer prices slowed.
Fed Chairman Ben S. Bernanke will speak tomorrow on monetary policy objectives and tools in Boston. He said on Oct. 4 that the central bank’s first round of large-scale asset purchases aided the economy and that further quantitative easing is likely to help more.
Rubber futures also gained on concern that output in China may be curbed because of wet weather in the nation’s southern island of Hainan, the main growing area, Sugata said.
Flooding forced the evacuation of 440,000 people and destroyed 3,000 houses, with more rain expected, Xinhua News Agency reported Oct. 12, citing Governor Luo Baoming. A total of 166,700 hectares (411,925 acres) of crops have been damaged, including 74,000 hectares destroyed, the news agency said.
Cash prices in Thailand added 0.3 percent yesterday to 116.80 baht ($3.92) per kilogram as China boosted purchases after the floods threatened domestic output, according to the Rubber Research Institute of Thailand. Local rubber processors also accelerated purchases on concerns about supply shortages, the institute said.
(bloomberg.com)
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