Rubber Declines From Record High on Concerns over China’s Monetary Policy

Rubber retreated after climbing to an all-time high for a fourth day as investors locked in profits amid concerns that China may tighten monetary policy, possibly curbing demand for the commodity.
The cash price in Thailand, the world’s largest supplier, rose to a record high on Friday.
June-delivery rubber dropped as much as 1.2 percent to 434.8 yen per kilogram ($5,207 a metric ton) on the Tokyo Commodity Exchange after rising to 442.9 yen earlier.
The most- active contract settled at 435.1 yen and climbed 5 percent this week, the most since Nov. 5.
“Sharp falls on Tocom emerged after the futures contract in Shanghai slipped in the afternoon session,” said Wanwilai Choilek, manager at the Hadyai, Thailand, branch of commodity broker DS Futures.
Investors are worried that China, the largest buyer, may tighten monetary policy and impose measures to control prices of commodities, said Ker Chung Yang, investment analyst at Phillip Futures in Singapore.
Rubber futures in Shanghai fell as much as 5.3 percent to 36,350 yuan ($5,481) per ton, the biggest decline since Nov. 15, before closing at 36,785 yuan. The contract retreated 1.1 percent for the week.
Demand for the commodity remains strong ahead of a low-production period in key producing countries in Asia, said Kazunori Kokubo, at Tokyo-based broker Yutaka Shoji.
Growers in Thailand will reduce tapping from February to April during the so-called wintering period.
The seasonal drop in output may worsen a supply shortage as global demand will keep rising, led by car sales in China and India.
The Thai cash price extended a rally to a record 159.80 baht ($5.28) per kilogram as persistent rain limits supply amid strong demand from China, Japan and India, the Rubber Research Institute of Thailand said on its Web site.
La Nina, a cooling of the Pacific Ocean blamed for record flooding in Australia, is near its peak and probably will last through the Northern Hemisphere’s spring, according to the US Climate Prediction Center.

(Source: http://www.thejakartaglobe.com/business/rubber-declines-from-record-high-on-concerns-over-chinas-monetary-policy/415699)