Tuesday on speculation that Chinese companies will replenish depleted stockpiles, Bloomberg reported. Inventories monitored by the Shanghai Futures Exchange are down 61% year-on-year. Additional market support is provided by a seasonal phenomenon called the wintering period, during which time farmers reduce rubber tapping.
Thai rubber output declines as much as 60% during this period compared to peak levels. Rubber futures are already up 20% so far this year after increasing 50% in 2010, driven by rising car sales in China and India. At the same time, higher-than-average rainfall in Thailand, Indonesia and Malaysia has curbed production. The Thai cash price for rubber hit an all-time high of US$6.06 per kilogram on Tuesday on concern that the wintering period may result in shortages.
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