[Dow Jones] Tocom RSS3 rubber futures settle lower on long liquidation, profit-taking, traders say. “The perception gaining ground is that the yen may continue to gain and the U.S. dollar may even move below Y92. This has sparked liquidation of long positions (in rubber futures),” says Tokyo-based broker. Yen reached high of 92.54 against greenback today. Most traders put support for rubber futures at Y200/kg. Benchmark Tocom February RSS3 rubber futures settles Y7.7 lower at Y203.2/kg, off intraday high of Y214.5/kg – level not seen since early October last year. (SAM)

Source: Dow Jones

Aug. 31 (Bloomberg) — Rubber dropped by as much as 4.6 percent as the yen climbed after the Democratic Party of Japan won national elections for the first time, and as a slump in Chinese stocks raised concern the commodity demand may weaken.

Futures in Tokyo retreated after earlier reaching 214.5 yen a kilogram, the highest level for the most-active contract since Oct. 8. The Japanese currency rose to a more-than-one-month high against the dollar, cutting the appeal of the yen-denominated contracts. China’s stocks fell as measures to curb lending threatened to derail an economic recovery.

“Investors are becoming concerned that raw material demand may not be sustained after the effects of governments’ stimulus measures disappear,” Takaki Shigemoto, analyst at Tokyo-based commodity broker Okachi & Co., said today by phone.

February-delivery rubber fell 3.7 percent to settle at 203.2 yen a kilogram ($2,191 a metric ton) on the Tokyo Commodity Exchange, booking the biggest daily loss since Aug. 17. Prices gained 3.9 percent this month, extending a 21 percent increase in July, the best performance since December 2006.

The Japanese currency advanced to 92.75 per dollar as of 3:26 p.m. in Tokyo from 93.60 in New York, after touching 92.55, the strongest level since July 13.

The DPJ routed the Liberal Democratic Party in Japan’s national elections, capturing almost two-thirds of 480 lower- house seats, national broadcaster NHK said. The DPJ has pledged to revive an economy emerging from its deepest recession since World War II by boosting child-care spending, cutting taxes and limiting the power of bureaucrats.

The Shanghai Composite Index slumped 6.3 percent to 2,680.60 at 2:28 p.m. local time. The gauge is down 21 percent in August, heading for its first monthly decline this year and the biggest since October, when it slid 25 percent.

Slowing Growth

Rubber futures also declined as Japanese manufacturers increased output in July at the slowest pace in four months, raising concern that effects of the global stimulus and inventory restocking are fading.

Production climbed 1.9 percent from June, when it rose 2.3 percent, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News expected a 1.4 percent gain.

July’s increase marked the third month of decelerating growth, signaling a recovery from the nation’s worst postwar recession may be gradual.

“Car sales may stop increasing after incentives from the governments end,” Shigemoto said. “We cannot be so optimistic about the raw material demand.”

Incentives End

The U.S. closed the so-called “cash for clunker” program this month after recording transactions worth $1.9 billion in rebates. The program offered buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel- efficient vehicles.

January-delivery rubber on the Shanghai Futures Exchange fell by the daily 5 percent limit to 18,070 yuan ($2,645) a ton at 2:31 p.m. local time.

Prices slumped after stockpiles monitored by the exchange increased to the highest since March 2008, raising concern that demand in China, the world’s largest consumer, may be slowing, Shigemoto said.

Rubber inventories increased 7,577 tons to 82,517 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the exchange said Aug. 28.

Source: Bloomberg

TOKYO, Aug 28 (Reuters) – Tokyo rubber futures hit a two-week high on Friday as fund buying continued, while tightening raw material supplies propped up physical rubber prices.
* The key Tokyo Commodity Exchange rubber contract for February delivery <0#JRU:> settled at 210.9 yen, up 4.1 yen or 2 percent from the previous close.
* It earlier rose as high as 212.4 yen, up 2.7 percent, nearing this month’s high of 214 yen marked on Aug. 14, the highest for any benchmark since October.
* “The rubber market has been showing resilience even when other markets fall in correction from time to time. That is probably because its fundamentals are relatively strong,” said a manager at a Japanese trading firm.
“Less and less people are bold enough to sell in a market which looks to remain bullish for the time being.”
* TOCOM’s benchmark rose 8.6 percent this week, reversing a 6.8 percent fall the previous week.
* In the physical market, Thailand’s RSS3 tyre grade was quoted at $2.18 per kg on Friday, up 6 percent from a week earlier and up 15 percent from a month ago.
* Supplies in Thailand, the world’s top producer, stayed limited as the weather in some producing areas was mostly wet this week, keeping farmers from tapping. In addition, demand from major tyre makers has been consistently strong on price dips, traders said.
* Indonesia’s SIR20 was more competitive than any Thai grade and was sold to tyre makers at around $1.91 per kg late on Thursday. [ID:nSP434555]
* U.S. crude futures extended gains towards $73 a barrel on Friday, after snapping a two-day fall a day ago from 10-month highs, boosted by better-than-expected GDP and jobs data in the United States that signal the economic recovery is on track. [O/R]
* The dollar inched up against the yen on Friday, which traders said was helped by buying from Japanese and European banks, after hitting its lowest in a month the previous day. [USD/]
* The dollar stood at 93.91 yen, compared to late New York levels of 93.48/54 yen. A weaker yen inflates yen-based TOCOM futures prices.
* Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 10 percent in the week ended on Thursday, the exchange said. [ID:nBJD002971] It was the ninth straight week of weekly gains.

Source: Reuters

SINGAPORE, Aug 28 (Reuters) – Indonesia’s SIR20 rubber grade was sold to tyre makers at around $1.91 a kg, but tight supplies prompted sellers to hold back stocks despite buying interest for nearby and forward shipments, dealers said on Friday.
Thai RSS3 grade was also traded at $2.115 a kg late on Thursday for October delivery and some quantity of Malaysia’s SMR20 was done at $2.06 a kg. Tyre makers as well as top consumer China were in the market, still hoping for a bargain, dealers said.
“The seller is king. Buyers are looking to buy SIR20 at 88.50 cents for October but no sellers show up,” said a dealer in Indonesia’s main growing island of Sumatra.
“There are plenty of buyers but you won’t find many sellers because we think the price can still go higher. Supply is very tight,” he said.
SIR20 was traded late on Thursday at 86.00 and 86.50 U.S. cents per pound ($1.89 and $1.91 a kg) for October/December with bids at 86.25 cents. African grades were traded this week at prices almost equal to SIR20 but there were no other details.
Prices of the Indonesian grade have gone up nearly 30 percent in the past two months on the back of gains in oil-driven Tokyo rubber futures and tight supplies during the wintering dry season, when trees shed leaves and latex output drops.
Tokyo rubber futures, which set the tone for physical prices, rose almost 3 percent on Friday, extending gains to a two-week high as strong oil prices spurred buying. [RUB/AS]
Rubber output in Indonesia, the world’s second-largest producer after Thailand, may reach 2.1-2.2 million tonnes in 2009, down as much as 19 percent from an earlier forecast of 2.586 million, because of severe drought, industry officials said. [ID:nJAK522927]
The price of tyre grades in Thailand and Malaysia have also gone up on the back of tight supplies due to rains and firm futures market. For a table on physical prices in Asia, click on [ID:nT181359]
“I think this market is very well supported. Thai producers are now selling rubber above 201 cents,” said a dealer in Singapore.
“From time to time we buy African grades but we treat them as raw material. We don’t buy and sell it as a finished product. Basically, the price keeps rising because of there’s a shortage in raw material.”
Dealers said SIR20 remained the cheapest option in Southeast Asia, with tyre makers now keen to buy December cargo.
“I heard some trades to China have been done for SIR20 and SMR20. China should be able to pay because those grades are still a lot cheaper than Thai’s,” said a dealer in Thailand’s southern city of Hat Yai.
Natural rubber output in Thailand, Indonesia and Malaysia dropped 13 percent to 3.02 million tonnes in the first half of this year as fewer trees were tapped, supporting prices, industry sources said. [ID:nSP485484]

Source: Reuters

Aug. 28 (Bloomberg) — Rubber advanced to a two-week high, heading for a second monthly gain, as rallies in crude oil and stocks boosted optimism for an economic recovery, increasing demand for the commodity used to make tires.

Natural rubber in Tokyo added as much as 2.7 percent after oil rose 1.5 percent yesterday as equity gains lifted investor sentiment and the dollar weakened, boosting the appeal of commodities as a hedge against inflation. Oil has risen 4.9 percent this month, boosting the cost of synthetic products.

“Oil’s rally and rising equities have bolstered investor sentiment,” Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said today by phone. “Futures may test the recent high of 214 yen.”

February-delivery rubber, which was listed on Aug. 26, rose as much as 5.6 yen to 212.4 yen a kilogram ($2,265 a metric ton), the highest intraday level since Aug. 14, on the Tokyo Commodity Exchange before settling at 210.9 yen. Prices have gained 7.9 percent this month after jumping 20 percent in July.

Crude oil for October delivery gained 0.5 percent to $72.82 a barrel on the New York Mercantile Exchange after rising $1.06 to $72.49 yesterday.

The MSCI Asia Pacific Index rose 0.6 percent to 113.61 as of 3:37 p.m. in Tokyo. The gauge has jumped 62 percent from a more than five-year low on March 9 on speculation government stimulus packages and lower borrowing costs will revive the global economy. In the U.S., the Standard & Poor’s 500 Index added 0.3 percent yesterday and the Dow Jones Industrial Average advanced 0.4 percent, rallying for the eighth straight day.

A report showing that the U.S. economy contracted less than expected in the second quarter. The total number of people collecting unemployment insurance fell to the lowest level since April, a sign that the economy is pulling out of the recession.

Toyota Output

Production by Toyota Motor Corp., Japan’s biggest automaker, dropped for a 12th straight month, declining 20 percent in July from a year earlier to 576,074 vehicles, the company said today. The number excludes Toyota’s affiliates Daihatsu Motor Co. and Hino Motors Ltd. Output by Honda Motor Co., the second-largest, dropped 24 percent to 258,972 vehicles last month, while Nissan Motor Co. built 265,623 vehicles, down 16 percent.

The output cut at Toyota was its smallest in nine months as government incentives spurred demand in the U.S., Japan and Europe, according to Bloomberg data. The company’s Corolla and Camry models were among the top five purchased under the U.S. “cash for clunkers” program, which ended Aug. 24 and generated almost 700,000 sales, according to the Transportation Department.

January-delivery rubber on the Shanghai Futures Exchange added 1.3 percent to 18,945 yuan ($2,773) a ton at 2:39 p.m. local time.

Source: Bloomberg