This entry was posted on Friday, February 19th, 2010 at 8:46 pm and is filed under Rubber News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Feb. 19 (Bloomberg) — Rubber declined, tracking a decline in crude oil and Asian stocks, after the Federal Reserve increased its discount rate, triggering concern that government stimulus programs are winding down.
Futures for July delivery in Tokyo fell as much as 0.9 percent after rising earlier to 300.2 yen per kilogram ($3,262 a metric ton), the highest level since Jan. 22. The contract closed at 294.6 yen, a 3.3 percent gain for the week.
Japanese stocks fell the most in two weeks after the Fed raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent.
“Equity market falls and declining oil prices spilled over to the rubber market, prompting investors to unwind positions,” Chaiwat Muenmee, analyst at DS Futures Co., said from Bangkok.
The MSCI Asia Pacific Index fell 2.3 percent to 115.16 as of 3:54 p.m. in Singapore, the steepest drop since Feb. 5, reversing this week’s advance.
Rubber also declined as falling crude oil prices reduced its competitiveness against rival synthetic rubber. Oil dropped for the first time in four days as the dollar’s rally weakened the appeal of the commodity as an alternative investment.
In the cash market, Thai shippers offered so-called RSS-3 grade rubber for April shipment at about $3.30 a kilogram today from $3.18 yesterday, said Kazuhiko Saito, chief analyst at Tokyo-based broker Fujitomi Co. Rubber trees shed leaves and latex output slows during wintering, the low-production season that normally begins in Thailand’s main growing areas in February.
Thai Output
Benchmark Thai rubber prices increased as buyers accelerated purchases on concern that the El Nino weather pattern may lower local production and boost prices, the Rubber Research Institute of Thailand said on its Web site today.
The price of unsmoked sheets gained 0.3 percent to 99.55 baht ($3) per kilogram. Ribbed smoked sheets added 0.3 percent to 103.12 baht a kilogram, according to the organization.
“Lower production in Thailand will drive prices further next week,” said Chaiwat. “We may see continued demand from China when the Shanghai market resumes next week but the demand growth may slow as some companies built up stock before holidays.”
The rubber market in Shanghai is closed this week for the Lunar New Year holidays.
Source: Bloomberg