April-delivery rubber on the Tokyo Commodity Exchange slumped as much as 3.6 percent to 356.4 yen per kilogram ($4,283 a metric ton) before settling at 359.5 yen. It also dropped as Standard & Poor’s Ratings Services cut Ireland’s credit rating, raising concern that Europe’s debt crisis may stall the region’s economic recovery. The market was closed yesterday for a holiday.
China will crack down on the use of loan funds in speculation, hoarding and artificially inflating prices of agricultural products, the China Banking Regulatory Commission said on Nov. 22, sending rubber futures in Shanghai tumbling by the daily limit yesterday. South Korea’s stocksand currency sank after North Korea fired artillery, killing two soldiers.
“Rubber was sold as tension in Korea sapped investor appetite for risk assets,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone. “Caution about China’s steps to curb inflation was another drag on rubber futures.”
May-delivery rubber fell as much as 2.9 percent to 31,300 yuan ($4,707) a ton before gaining 0.2 percent to close at 32,285 yuan on the Shanghai Futures Exchange. The contract reached a record 38,920 yuan on Nov. 11.
China, the biggest buyer, ordered banks on Nov. 19 to set aside larger reserves for the second time in two weeks. The move to contain excess liquidity came after Premier Wen Jiabao held a Cabinet meeting earlier in the week and called for a crackdown on speculation in agricultural goods, saying price controls may be needed on “daily necessities.”
China Controls
China’s cabinet said last week it may impose temporary price controls after inflation gained the most since September 2008 and food prices climbed 10.1 percent.
Rubber in Tokyo has climbed 32 percent this year as heavy rain in Thailand, Indonesia and Malaysia, the top three growers, disrupted tapping and lowered production.
The cash price of natural rubber in Thailand, the largest producer and exporter, fell 1.1 percent to 131.25 baht ($4.36) per kilogram today as worries over China attempt to curb inflation and Ireland debt crisis prompted investors to reduce position in agricultural contracts, according tothe Rubber Research Institute of Thailand. The downside is limited because of supply shortage from major producers, it said. Thai price yesterday reached a record 132.75 baht per kilogram.
Ireland’s debt rating was lowered two steps by Standard & Poor’s, with a negative outlook, as the nation’s bailout of its banking system is set to escalate the government’s borrowing needs. Ireland is hammering out an aid package with the EU and the International Monetary Fund to rescue its banking system.
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