March 31 (Bloomberg) — Thailand, the world’s largest rubber exporter, is “very satisfied” with prices that have surged to a record in local-currency terms on strong overseas demand and limited supply, a deputy minister said.

“Prices have risen on their fundamentals,” Supachai Phosu at the ministry of agriculture and cooperatives said in a phone interview today, without giving a forecast. “The government doesn’t need to build up inventory and will leave it to exporters to manage their stockpiles,” Supachai said.

Rubber priced in baht reached an all-time high this week, while the yen-denominated contract in Tokyo has surged to the highest level since 2008, buoyed by increased demand as the global economy moves out of recession. Drier-than-usual weather in southern Thailand, which has coincided with the annual low- output season, has also spurred the rally.

The government’s view will “continue to support domestic prices to rise further,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said from Bangkok.

Rubber on the Tokyo Commodity Exchange has risen 12 percent this year, touching 314 yen a kilogram yesterday, the highest price since September 2008. The September-delivery contract settled today at 308.3 yen ($3,310 a metric ton).

State Fund

“The government is very satisfied with rubber prices,” Supachai said from Bangkok. An 8 billion baht ($247 million) state fund that may be used to shore up local prices by buying latex from farmers “will be used when prices fall,” he said.

The May-delivery contract on Thailand’s Agricultural Futures Exchange rose to 114 baht a kilogram, the highest price since the bourse was set up in 2004, according to a statement yesterday. The auctioned price of ribbed smoked sheet 3 was a record 112 baht a kilogram today, according to Bloomberg data from the Rubber Research Institute of Thailand

The agriculture ministry has asked the state-owned Rubber Estate Organization, which promotes output and exports, to stop building up inventories, said Supachai. The body holds about 500 tons, he said. That’s less than 1 percent of forecast output.

Production this year may total 3.1 million tons, with exports of about 2.85 million tons, said Supachai. The figures are right in line with Jan. 13 forecasts from the nation’s Office of Agricultural Economics.

Source: Bloomberg

[Dow Jones] Physical prices of Thai USS3 rubber continue to break records on tight supply due to wintering, drought, edging up to THB105.13-THB106.75/kg vs THB104.58-THB106.65/kg yesterday despite falls in Asian rubber futures. Outside central markets, factories paying around THB108/kg. Exporters say they”re offering USS3 at higher prices but find it difficult to obtain supply as quantities limited, see no respite for another two months unless abundant rain. Total quantity sold in three central markets of Thailand estimated at 29.8 tons versus 53.7 tons yesterday: 14.8 tons in Hat Yai, 1 ton in Surat Thani, 14 tons in Chandee.

Source: Dow Jones

[Dow Jones] Tocom rubber futures settle 0.6% lower amid profit taking after reaching 18-month high yesterday; yen”s gains vs dollar contribute to weakness. Still, upward trend intact, traders say; today”s weakness was to be expected after gains in last few sessions. “The supply in the physical market is tight, the demand is there and the economy is recovering, so overall, rubber prices are intact,” says Singapore-based commodities brokerage executive. Benchmark September rubber contract settles Y2 lower at Y310/kg, off Y308.4/kg intraday low.

Source: Dow Jones

March 29 (Bloomberg) — Rubber advanced to the highest level since September 2008 as supply in Thailand, the world’s largest exporter, declined and an increase in oil prices boosted the cost of making rival synthetic products used in tires.

Futures in Tokyo rose as high as 312.3 yen per kilogram ($3,373 a metric ton) after last week rallying 5.9 percent. The price has advanced 13 percent this year.

Shippers in Thailand raised the price of natural rubber for overseas buyers by 3 percent to reflect declining supply, said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo. Thailand is in the annual low-output season, known as wintering, which runs from February to April.

“Investors bought rubber futures as they were undervalued when compared with physical prices,” Shigemoto said by phone today.

Rubber for September delivery, the most-active contract, gained 1.9 percent to settle at 312 yen on the Tokyo Commodity Exchange.

Thai shippers raised offers for so-called RSS-3 grade rubber for May shipment to $3.40 a kilogram from $3.30 on March 25, Shigemoto said. During wintering rubber trees shed their leaves and latex production slows.

Futures also increased as higher oil prices raised the appeal of natural rubber as an alternative to synthetic products made from petroleum, he said.

Oil Climbs

Crude oil climbed from a two-week low on speculation that the economic recovery will boost fuel demand, and as receding concerns over Greece’s debt crisis bolstered the euro against the dollar.

The May-delivery contract rose 0.8 percent to $80.61 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 3:39 p.m. Tokyo time.

Rubber for September delivery rose as much as 1.6 percent to 25,185 yuan ($3,689) a ton on the Shanghai Futures Exchange, the highest level since March 1. It traded at 25,050 yuan at 2:45 p.m. local time.

Natural rubber inventories monitored by the Shanghai bourse plunged 24,663 tons to 74,220 tons, based on a survey of 10 warehouses, the exchange said March 26. That was the lowest level since August 2009.

Source: Bloomberg

[Dow Jones] Tocom rubber futures settle 2.6% higher after rising to intraday high of Y312.3. Tight physical rubber supply in wintering countries contributing to surge in prices; crude prices higher in Asian trading hours, yen stays weak. Some profit-taking may take place, but downside limited, upward trend in short term, says Masami Aratake, trader at Tokyo-based Newedge Japan; adds September contract likely to test Y320/kg, support at Y300/kg. Benchmark September rubber contract settles Y8 higher at Y312/kg.

Source: Dow Jones