Rubber Climbs to 30-Year High in Tokyo, Record in Shanghai, on Thai Supply

Rubber in Tokyo surged to 30-year high, while futures in Shanghai advanced to a record, on concern that rain will likely lower the output of major growers and as commodities rallied.

April-delivery rubber on the Tokyo Commodity Exchange rose as much as 2.1 percent to 366.8 yen a kilogram ($4,536 a metric ton), the highest level since February 1980. The contract settled at 365.2 yen and has rallied 32 percent this year. May- delivery rubber on the Shanghai Futures Exchange gained for a seventh day, surging by the daily limit to a record 37,735 yuan ($5,660) a ton before closing at 37,370 yuan.

Heavy rain in Southeast Asia and India damaged rubber plantations amid strong demand, according to the Rubber Research Institute of Thailand. About 1.9 million acres of farm land, or 4.8 percent of total arable land, was damaged by floods that spread across 51 provinces in Thailand, according to the Department of Disaster Prevention and Mitigation.

“Persistent, heavy rainfall across the top three producers - Thailand, Indonesia and Malaysia - has raised concerns that tightening supplies will worsen,” Chaiwat Muenmee, analyst at DS Futures Co., said by phone from Bangkok.

The cash price in Thailand, the largest producer, gained 2.4 percent to 128 baht ($4.33) per kilogram today because rain in the south has cut supply, the Rubber Research Institute of Thailand said. The price touched a record 130.55 baht on April 27. The rubber-trading center in Songkhla province was closed for three days from Nov. 2 because of floods.

Commodities Demand

“Rubber advanced as a record-breaking rally in gold raised speculation that investor demand for commodities is rising,” said Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo.

Gold for immediate delivery climbed to a record, rising as much as 0.4 percent to $1,414.85 an ounce on concern that some European governments may struggle to raise funds, boosting demand for high-yield assets. Portugal prepared to sell as much as 1.25 billion euros ($1.74 billion) of debt tomorrow.

“Given tight fundamentals, rubber futures in Tokyo are expected to test the record high of 388.9 yen” reached on Feb. 13, 1980, said Masayo Kondo, the president of Commodity Intelligence Ltd., a Tokyo-based research company.

Crude rubber stockpiles held at Japanese warehouses rose 3.6 percent to 7,771 tons on Oct. 31, according to data today from the Rubber Trade Association of Japan.

(bloomberg.com)