Jan. 27 (Bloomberg) — Rubber declined to the lowest level in four weeks on concern demand for the commodity may weaken as China, the largest user, stepped up measures to slow economic growth. A stronger yen also curbed demand for the material.

Futures in Tokyo fell as much as 3.4 percent to 276.5 yen per kilogram ($3,098 a metric ton), matching the price reached on Dec. 30. Prices lost 6.1 percent in the previous three days, paring this month’s gain to 2.4 percent.

Chinese banks have begun restricting new loans, responding to a push by regulators to contain credit and curb the expansion of the world’s fastest-growing major economy. Concerns over slower growth increased after the International Monetary Fund said yesterday the global financial system remains “fragile,” with sovereign debt posing a risk to markets.

Bank of China Ltd. and China Construction Bank Corp. were told to restrict new loans, according to people familiar with the matter. Gross domestic product in China, the world’s third- biggest economy, expanded at the fastest pace since 2007 last quarter. Slowdown in the nation’s growth may curb vehicle sales, said Kazuhiko Saito, an analyst at Fujitomi Co. in Tokyo.

“The market may retreat further as concern about China’s monetary tightening reduced the risk appetite of investors,” he said by phone today.

July-delivery rubber declined 2.8 percent from its settlement yesterday to end at 278.20 yen per kilogram on the Tokyo Commodity Exchange. Prices more than doubled last year.

May-delivery rubber on the Shanghai Futures Exchange lost as much as 3.3 percent to 23,655 yuan ($3,465) a ton, the lowest level since Dec. 30, before settling at 23,955 yuan.

Stronger Yen

Futures in Tokyo also declined after the Japanese currency touched 89.14, the strongest in five weeks against the dollar. The yen rose 0.3 percent to 89.30 against the dollar at 3:38 p.m. in Singapore.

“The Japanese yen was sharply stronger amid worries over the health of U.S. economy,” Rewat Yenchai, an analyst at AGROW Enterprise Ltd., said by phone from Bangkok today. “That cut appeal for yen-dominated contracts.”

The yen gained on concern the global economic recovery will slow, increasing demand for Japan’s currency as a refuge. The dollar also came under pressure amid speculation the Federal Reserve will keep interest rates near zero before a report forecast to show U.S. business activity slowed this month.

The yen typically strengthens in times of financial turmoil as Japan’s trade surplus makes the currency attractive as it means the nation does not have to rely on overseas lenders.

“Risk aversion is strong globally, making it easy for the yen to be bought,” said Masahide Tanaka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co.

Source: Bloomberg

Jan. 26 (Bloomberg) — Global natural rubber supplies are tight and the outlook is bullish on favorable fundamentals, the Association of Natural Rubber Producing Countries said.

“Exporting countries are oriented towards ensuring the best price,” said Djoko Said Damardjati, the association’s secretary general, in a newsletter. That will improve farm income and export earnings, he said. No producer nation “holds any buffer stock,” he said.

Prices doubled in 2009, the best performance since at least 1976, driven by optimism that demand was increasing as the world recovered from recession and as producers curbed supplies. The association includes Cambodia, China, India, Indonesia, Malaysia, Papua New Guinea, Singapore, Sri Lanka, Thailand and Vietnam. Total output represents about 94 percent of global supply.

“The statement is optimistic that prices could move up further,” said Umaporn Thepnuan, marketing official at Future Agri Trade Co. in Bangkok. Futures in Tokyo may climb to 350 yen per kilogram ($3,891 a ton) should they close above 303.8 yen, the highest end-session level since September 2008, she said, using price history as a guide.

Thailand, Indonesia and Malaysia, the three biggest growers, view the current price as appropriate and agreed to take steps to counter any negative trends, according to a joint statement after a meeting last week in Kuala Lumpur.

Tight Supply

The nations put on hold plans to curb exports as the economic recovery boosted prices and demand, the International Rubber Consortium Ltd., which represents growers and exporters, said Oct. 27. Supply was cut after prices fell to 99.8 yen a kilogram ($1,103 a metric ton) in December 2008, the lowest level since August 2002. The price has almost tripled since then to 284.6 yen a kilogram.

The industry is “passing through a situation of tight supply caused by a progressive decline in production and a marked rebound in demand,” Djoko said in the newsletter.

The association said it raised its prediction for output this year in Indonesia, the second-largest producer, to 2.77 million tons from 2.68 million tons. India’s production may total 853,000 tons, up from the previous estimate of 848,000 tons, it said. Vietnam may produce 770,000 tons, up from 680,000 tons, and exports will probably be 750,000 tons, it said, without giving estimates for other countries.

Total supply of natural rubber in association member countries declined 5.1 percent in 2009 to 8.7 million tons. The plantation area expanded to 7.13 million hectares at the end of 2009 from 7.02 million hectares a year earlier, it said.

Source: Bloomberg

BANGKOK, Jan 26 (Reuters) – Tokyo rubber futures dropped
again on Tuesday as players kept unwinding contracts after seeing
oil prices continue to fall, dealers said.
* The newly listed benchmark contract on the Tokyo Commodity
Exchange <0#JRU:> for July delivery fell 3.8 yen from the opening
price to settle at 286.2 yen ($3.19) per kg. The previous
benchmark, June, fell 2.0 yen to finish at 284.0 yen per kg.
* Oil tumbled below $75 a barrel on Tuesday, approaching
one-month lows, after higher reserve ratios for selected Chinese
banks took effect, rekindling concern that tightening measures by
the world’s second-largest oil consumer would curb demand.
[ID:nSGE60P03C]
* Dealers said TOCOM prices were expected to be volatile,
moving in line with oil prices. However, TOCOM was unlikely to
fall sharply as a drop in supply in the physical market should
provide support.
($1=89.76 Yen)

Source: Reuters

Jan. 26 (Bloomberg) — Rubber dropped for a third day to near the lowest level in three weeks as concern that China will step up measures to slow economic expansion spurred a rally in the Japanese currency, cutting the appeal of yen-based contracts.

Rubber for June delivery fell 0.7 percent to 284 yen per kilogram on the Tokyo Commodity Exchange. The contract dropped as much as 0.8 percent to 283.8 yen ($3,164 a metric ton).

Several Chinese banks will face an additional increase in their reserve ratios, Reuters reported, citing sources it didn’t identify. China has already taken action to restrict record bank loans, while President Barack Obama plans to limit the size and trading activities of financial institutions. China is the world’s largest rubber consumer.

“Caution about China’s tightening of its monetary policy put a drag on the price of rubber futures,” Hisaaki Tasaka, an analyst at Tokyo-based commodity broker ACE Koeki Co., said today by phone. Futures also “took a cue for direction from the volatile currency market,” he added.

The contract earlier gained 2.1 percent to 292.0 yen as the yen declined after Obama’s endorsement of a second term for Federal Reserve Chairman Ben S. Bernanke, boosting demand for higher-yielding currencies.

Prices fell to 281.5 yen yesterday, their lowest level since Jan. 4, after Obama last week called for investment limits on banks to help prevent another financial crisis. Rubber for July delivery, listed on the exchange today, settled at 286.2 yen per kilogram after opening at 290 yen.

China Growth

China’s central bank has driven bill yields higher to reduce funds in the banking system on concern record loan growth will fan inflation and lead to bubbles in the property market. Chinese banks have suspended new lending since Jan. 19 across the country, Dong Tao, a Hong Kong-based economist at Credit Suisse Group AG, wrote in a note to clients.

May-delivery rubber on the Shanghai Futures Exchange lost as much as 1.9 percent to 24,120 yuan ($3,533) a ton before trading at 24,200 yuan at 2:36 p.m. local time. Prices slumped to a one-month low of 24,105 yuan on Jan. 22.

In the cash market, shippers in Thailand, the biggest exporter, are offering RSS-3 grade rubber for March shipment at $3.13 a kilogram, from last week’s peak of $3.25 reached Jan. 20, Tasaka at ACE Koeki said. Lower prices may be attracting physical buying, he added.

Supplies in the global natural rubber market are tight and the fundamentals are favorable for prices, the Association of Natural Rubber Producing Countries said in a newsletter today.

The association estimated Indonesian output at 2.77 million metric tons in 2010, India’s at 853,000 tons and Vietnam’s at 770,000 tons.

Source: Bloomberg

SINGAPORE (Dow Jones)–Fundamentals are favorable for natural rubber prices to stay bullish, Djoko Said Damardjati, secretary general of the Association of Natural Rubber Producing Countries, said Monday.

ANRPC member countries control around 94% of the world”s natural rubber output.

He said media reports earlier this month that major producing countries are planning to release 300,000 metric tons of natural rubber in the market are baseless.

“None of the natural rubber producing countries presently hold any buffer stock of natural rubber,” Djoko said in the ANRPC”s monthly report released worldwide Monday.

Djoko expressed concern that such misleading reports of a non-existent buffer stock are affecting prices.

Source: Dow Jones