Rubber Futures Climb to Record on Thai Supply Concerns Amid Strong Demand

Rubber climbed to an all-time high in Tokyo, reversing an earlier drop, as strong demand increased supply concerns. The cash price in Thailand, the largest supplier, also reached a record.

June-delivery rubber gained as much as 0.7 percent to 429.4 yen a kilogram ($5,230 a metric ton) after falling 1.7 percent on the Tokyo Commodity Exchange. The most-active contract, which jumped 50 percent last year, settled at 428.2 yen.

Latex production in top exporter Thailand is set to shrink as growers 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.

“Investors snapped up rubber after cashing in profits as its fundamentals remain sound,” Sureerat Kunthongjun, an analyst at AGROW Enterprise Ltd., said by phone from Bangkok. “Buyers, especially from China, accelerate purchases ahead of Chinese New Year and wintering season in Thailand,” she said.

The Thai cash price extended a rally to a record 154.55 baht ($5.13) per kilogram as rain limits supply amid strong demand ahead of the low-production period, the Rubber Research Institute of Thailand said on the website today.

The northeast monsoon continues to cover the Gulf of Thailand, causing widespread rain across southern provinces, according to Thai Meteorological Department. Scattered rains are expected in the south in February and March, it said.

Car Sales

The rally was buoyed by a weak yen and double-digit growth of Indian car companies, Anand James, chief analyst at brokerage Geojit Comtrade Ltd., said in an e-mail today.

Maruti Suzuki India Ltd., the nation’s biggest carmaker, sold 99,225 vehicles in December, up 17 percent from a year earlier, the company said in a statement yesterday. December sales of Tata Motors Ltd., India’s biggest truckmaker, surged 30.6 percent to 67,441 units.

General Motors Co., the biggest overseas automaker in China, boosted sales in the country 29 percent last year as government stimulus policies and rising incomes spurred demand.

Sales totaled 2.35 million vehicles, Detroit-based GM said yesterday in an e-mailed statement. The growth rate slowed from 2009, when deliveries surged 67 percent to 1.83 million.

In the U.S., the largest auto market after China, industrywide sales rose to 1.14 million in December from 1.03 million a year earlier, Autodata Corp. said yesterday. The annual total increased to 11.6 million cars and light trucks from 10.4 million in 2009, according to the research firm.

The yen weakened to 82.21 a dollar today, near a one-week low of 82.28 reached yesterday.

May-delivery rubber in Shanghai advanced 1.3 percent to close at 38,100 yuan ($5,754) a ton after falling as much as 1.3 percent. It reached a record 38,920 yuan on Nov. 11.

(Source: http://www.bloomberg.com/news/2011-01-05/rubber-futures-decline-from-record-as-commodities-slump-on-dollar-s-rally.html)