Rubber Futures Drop as Rally to Record Prompts Investors to Lock-in Gains

Rubber reversed gains after surging to a record for a fourth day as investors sold the commodity to lock-in gains amid concerns over tightening global supply. The Thai cash price gained to an all-time high.

The June-delivery contract, which listed today on the Tokyo Commodity Exchange, advanced to 417 yen per kilogram ($4,975 a metric ton) before settling at 413.5 yen.

“Investors cashed in on profits ahead of a holiday in Tokyo tomorrow,” said Wanwilai Choilek, manager at the Hadyai, Thailand branch of commodity broker DS Futures Ltd. Prices should hover at high level ahead of New Year holidays, she said.

A global supply deficit is still in place, supporting prices, Anand James, chief analyst at brokerage Geojit Comtrade Ltd., said from Kochi, India.

The Thai cash price advanced 1 percent to 148.05 baht ($4.91) per kilogram, the Rubber Research Institute of Thailand said today. Fundamentals remain supportive as supplies are inadequate following persistent rains across major producing countries amid strong demand, the institute said.

Output from Thailand, the world’s biggest exporter, has been hurt by heavy rains and may shrink further as the low- production season starts around February.

“Bullish fundamentals support rubber prices,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Investors are becoming optimistic about the global economic recovery and growth in industrial commodity demand.”

U.S. Recovery

Same-store sales at a selection of U.S. retailers posted their biggest holiday jump, according to a chain-store sales index released by the New York-based International Council of Shopping Centers and Goldman Sachs Group Inc. Holiday retail sales are a key economic indicator in the U.S.

Japan’s export growth accelerated for the first time in nine months as a rebound in global demand helped the nation’s economy withstand an advance in the yen.

Overseas shipments rose 9.1 percent in November from a year earlier, compared with October’s 7.8 percent, the Finance Ministry said today. The rebound eased concern Japan is losing the main driver of a recovery from its worst postwar recession.

May-delivery rubber in Shanghai lost 2.9 percent to close at 37,585 yuan ($5,503) a ton. The contract climbed to a record 38,920 yuan Nov. 11.

(Source: http://www.bloomberg.com/news/2010-12-22/rubber-climbs-to-all-time-high-as-u-s-recovery-raises-outlook-for-demand.html)