Rubber Gains To 5-Week High On Tight Supply During Thai New Year

Rubber climbed to the highest level in five weeks on concerns that supply will tighten during New Year holidays in Thailand, the largest exporter. The September-delivery contract advanced as much as 3.9 percent to 481.9 yen a kilogram ($5,688 a metric ton), the highest level since March 3, and traded at 472.1 yen at 2:12 p.m.on the Tokyo Commodity Exchange. The most-active contract gained 8.5 percent last week, the most since Nov. 5.
“Supply will stop temporarily during Thai New Year festival,” said Hiroyuki Kikukawa, general manager of research at IDO Securities in Tokyo. Government agencies and banks will be closed during April 13-15 in Thailand. Rising crude oil prices and a decline in China’s rubber stockpiles are also supporting prices, said Kikukawa. Natural-rubber inventories fell for a ninth week, down 5,645 tons to an eight-month low of 21,966 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Friday (Apr 8). China’s natural-rubber imports were 210,000 tons in March, compared with 110,000 tons in February and 190,000 tons in March 2010, customs data showed yesterday (Apr 10). Inbound shipments declined about 4 percent to 470,000 tons in the first three months from 490,000 tons a year ago, customs said on its website on April 10.
Thai Supply
“Supply availability is limited following floods in the country’s southern provinces, providing positive sentiment to the market,” Navarat Kaewpratarn, a senior marketing official at Future Agri Trade Co. said by phone from Bangkok. Supply in Thailand declined after floods in southern provinces damaged plantations. Flooding in 10 southern provinces of Thailand has killed 58 people and affected 2 million, the Department of Disaster Prevention & Mitigation said in a statement on its website. About 50,000 rai (19,641 acres) of rubber plantations have been damaged. Oil advanced for a fourth day in New York as NATO escalated its air campaign over Libya and on concern unrest may spread to other energy-exporting countries in the Middle East. Crude oil for May delivery gained as much as 67 cents to $113.46 a barrel in electronic trading on the New York Mercantile Exchange today (Apr 11). The physical price of Thai rubber climbed 0.4 percent to 184.80 baht ($6.15) a kilogram today (Apr 11), according to the Rubber Research Institute of Thailand. Supply remained low in southern Thailand as some plantations are still inundated, disrupting latex tapping, it said.
Rubber for September delivery gained as much as 3.6 percent to 37,985 yuan ($5,811) a ton on the Shanghai Futures Exchange before trading at 37,130 yuan at the midday break.
(Bloomberg, April 12, 2011)