Rubber Futures Advance for Second Day on Tight Supply, U.S. Economic Data

Rubber climbed for a second day as U.S. jobless claims and manufacturing data boosted optimism that the economic recovery is gathering pace amid tight supply from major producers in Southeast Asia.

April-delivery rubber on the Tokyo Commodity Exchange surged as much as 3.8 percent to 375.9 yen per kilogram ($4,502 a metric ton) before settling at 367.7 yen. The most-active contract has gained 2.1 percent this week and climbed 33 percent this year as heavy rain in Thailand, Indonesia and Malaysia, the top three growers, has disrupted tapping and lowered production.

“Worries over the Irish debt problem have eased and U.S. economic data are supportive, raising optimism demand for the commodity will continue to grow,” Varut Rungkhum, analyst at commodity broker Agro Wealth Ltd., said by phone from Bangkok.

Ireland will probably seek a bailout from the European Union and International Monetary Fund worth “tens of billions” of euros to rescue its battered banks, central bank Governor Patrick Honohan told Irish state broadcaster RTE yesterday. Fewer workers than forecast filed for U.S. jobless benefits, while Philadelphia-area manufacturing topped estimates.

May-delivery rubber on the Shanghai Futures Exchange gained by the daily 5 percent limit to 34,415 yuan ($5,185) a ton and closed at that level. The contract has lost 3.8 percent this week, down from a record 38,920 yuan reached on Nov. 11, amid concern that China may take additional steps to curb inflation.

Tight Supply

“Supply remains tight,” Gu Jiong, an analyst at commodity broker Yutaka Shoji Co., said by phone from Tokyo. Rubber was also supported by rallies in other commodities and a weakening Japanese currency, he added.

The cash price in Thailand climbed to a record 132.25 baht ($4.42) per kilogram today as heavy rain and floods in the country’s south damaged trees, tightening supply, according to the Rubber Research Institute of Thailand.

Natural-rubber output in Thailand may decline by 10 percent to 870,000 tons in the fourth quarter, reducing total output this year by 5 percent to 3 million tons, according to an estimate by the Thai Rubber Association.

Applications for unemployment insurance payments rose by 2,000 to 439,000 in the week ended Nov. 13, Labor Department figures showed. Claims were projected to rise to 441,000, according to the median economist estimate in a Bloomberg survey. The total number of people collecting unemployment insurance dropped to the lowest level in two years, while those receiving extended payments climbed.

Manufacturing in the Philadelphia region expanded in November to the highest level this year. The Fed Bank of Philadelphia’s general economic index rose to 22.5 from 1 a month earlier. Readings greater than zero signal expansion. The gauge was forecast to increase to 5, according to the median estimate in a Bloomberg News survey.

(Source: http://www.bloomberg.com/news/2010-11-19/rubber-futures-advance-for-second-day-on-tight-supply-u-s-economic-data.html)