Rubber Futures Pare Gains as Investors Lock in Profit After Record Rally

Rubber retreated from a record rally as some investors cashed in profits and falling crude oil cut the appeal of the commodity used to make tires and gloves. The cash price in Thailand also reached a record.

May-delivery rubber on the Tokyo Commodity Exchange declined as much as 0.8 percent to 392.5 yen per kilogram (4,703 a metric ton) after climbing to an all-time high of 400.1 yen earlier. The price, which has advanced 43 percent this year, was little changed at 395.6 yen at 1:05 p.m. local time.

“Investors locked in gains after rubber futures rallied to a record,” Chaiwat Muenmee, analyst at DS Futures Co., said today by phone from Bangkok. “Falling crude oil prices and the strengthening yen also weighed on the market,” he said.

Oil fell from a four-day high in New York after heating-oil futures declined because of concern that the cold snap in the U.S. will be less severe than forecast, reducing fuel demand. The January contract declined 0.5 percent to $88.13 a barrel on the New York Mercantile Exchange.

The Japanese currency rose to 83.56 against the U.S. dollar from 83.39 yesterday before Federal Reserve policy makers today discuss interest rates and bond purchases.

The cash price of natural rubber in Thailand, the largest producer and exporter, climbed to a record 141.05 baht a kilogram from 138.55 baht yesterday, as persistent rains have lowered output amid continued demand from China and India, the Rubber Research Institute of Thailand said on its website today.

Shipments Decrease

Shipments from Thailand decreased after heavy rain and flooding reduced latex production, worsening a supply shortage. Supply may decline further as Thai farmers will reduce tree- tapping amid the so-called “wintering” season, said Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co.

Crude rubber stockpiles held at Japanese warehouses fell 7.6 percent to 6,816 tons at the end of last month, according to data from the Rubber Trade Association of Japan.

Sumitomo Rubber Industries Ltd., the second-largest Japanese tiremaker, said it would increase product prices in overseas markets by as much as 15 percent from January because of record prices.

The announcement came after Bridgestone Corp., the world’s largest tiremaker, said last week it would raise Japanese prices of truck and bus tires by an average of 7 percent in March.

China’s sales of passenger cars including multipurpose and sport-utility vehicles increased 29.3 percent to 1.34 million last month, higher than the previous record of 1.32 million in January, according to the China Association of Automobile Manufacturers. The pace of growth was the fastest since April.

Car sales in India increased 21 percent to 161,497 units in November, according to the Society of Indian Automobile Manufacturers. The rubber deficit in the country, the world’s second-largest consumer, may increase to 840,000 tons in 2020 from 175,000 tons next year, Vinod Simon, president of the All India Rubber Industries Association, said this month.

May-delivery rubber in Shanghai rose as much as 1.9 percent to a one-month high of 35,990 yuan ($5,408) a ton before trading at 35,455 yuan at midday break. The contract climbed to a record 38,920 yuan on Nov. 11.

(Source: http://www.bloomberg.com/news/2010-12-14/rubber-futures-in-tokyo-advance-to-record-a-second-day-on-tight-supplies.html)