Rubber dropped after jumping the most in almost a month as a strengthening Japanese currency cut the appeal of the yen-denominated contracts.
September-delivery rubber dropped as much as 1.3 percent to 420.5 yen per kilogram ($5,115 a metric ton), reversing a gain of 2.8 percent, before trading at 424 yen by 11:30 a.m. local time on the Tokyo Commodity Exchange. The contract yesterday jumped as much as 5.3 percent, the biggest gain since March 22, to 431.3 yen per.
“It’s a mix of factors today,” Ker Chung Yang, an analyst at Phillip Futures Pte, said by phone today from Singapore. “Stronger yen sends rubber weaker, while latex production is still low during wintering season.”
The yen gained to 82.25 per dollar from 82.56 yesterday before a report forecast to show U.S. house prices fell for a fourth month, underscoring prospects the Federal Reserve will maintain monetary stimulus even as central banks in Europe and Asia increase interest rates.
Farmers in Thailand, Indonesia and Malaysia, the top three growers, reduce tapping during the low production season, so- called wintering from February to May when trees shed leaves and latex production drops, according to the Association of Natural Rubber Producing Countries.Thai output declines as much as 60 percent compared with peak levels, the group said.
Thai Floods
Unseasonal rains from the start of this year in Thailand caused floods in 10 southern provinces since March 23 and may damage about 50,000 rai (19,641 acres) of rubber plantations, according to the Department of Disaster Prevention & Mitigation. Water levels receded and the government is rebuilding infrastructure in inundated areas, it said.
Rubber imports by India, the second-largest consumer, added 0.4 percent to 177,482 tons in the year to March 31, the state- run Rubber Board said in an e-mail on April 19. Output in the same period climbed 3.7 percent to 861,950 tons.
Rubber for September delivery in Shanghai surged as much as 1.1 percent to 35,270 yuan ($5,409) a ton before trading little changed at 34,870 yuan at 10:16 a.m. local time.
The physical price of Thai rubber gained 1.3 percent to 177.05 baht ($5.90) a kilogram yesterday, according to the Rubber Research Institute of Thailand. The price will be updated around midday.
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