May 18 (Bloomberg) — Rubber advanced for the first time in three days as rising crude oil prices improved the appeal of the raw material used to make tires.

Futures gained as much as 4.1 percent after falling 3.6 percent yesterday to the lowest close in five months. The price reached a 21-month high of 338.5 yen per kilogram ($3,656 a metric ton) April 16 on a seasonal decrease in supply from Thailand, the largest exporter.

Crude oil advanced for the first time in six days as some investors took the view a drop below $70 a barrel made the commodity attractive to buy. Natural rubber typically tracks oil prices as a gain in crude boosts the cost of synthetic rubber made from petroleum.

“Oil staying above $70 a barrel provides positive sentiment to the rubber market,” Chaiwat Muenmee, an analyst at broker DS Futures Co., said by phone from Bangkok.

Rubber for October delivery, the most-active contract, gained as much as 10.3 yen to 263.1 yen before settling at 262 yen on the Tokyo Commodity Exchange.

Crude oil for June delivery climbed as much as 1.5 percent to $71.12 a barrel on the New York Mercantile Exchange before trading at $70.99 at 4:07 p.m. in Tokyo. Yesterday, the contract fell to $70.08 a barrel, the lowest settlement since Dec. 14.

The cash market in Thailand, world’s largest producer, remains closed for a second day as political turmoil escalates. At least 38 people have been killed since May 13 and more than 200 injured after protesters occupied parts of downtown Bangkok.

“The political turmoil is unlikely to affect the Tocom market as rubber exports haven’t been disrupted,” said Chaiwat.

September-delivery rubber on the Shanghai Futures Exchange added 3.6 percent to 21,825 yuan ($3,197) a ton.

Source: Bloomberg

[Dow Jones] Thailand”s rubber exports so far unaffected by the civil unrest in Bangkok, traders say. “The bulk of the exports take place through Laem Chabang port, which are carrying on as usual,” says exporter in Thailand; adds even though futures prices have declined, physical supply continues to be tight. “Most of the rubber is grown in southern Thailand, which has been affected by Islamist insurgency but that hasn”t stopped production,” says another trader. Laem Chabang port, which began operations in 1991, is 110 kilometers south of Bangkok. Thailand, world”s largest exporter of natural rubber, shipped out 2.7 million tons in 2009. Monthly exports mostly range between 200,000 and 300,000 tons.

Source: Dow Jones

[Dow Jones] Physical prices of Thai USS3 rubber relatively steady at THB101.18-THB102.29/kg vs THB100.5-THB102.62/kg Friday, bucking weak Tocom rubber futures, as slow arrivals persist due to hot, dry weather. “Latex output has been low due to the weather, but there has been some rain in the south recently so hopefully the situation will improve,” factory executive in Thailand says; adds margins hit by high USS3 prices. Outside central markets, factories paying as high as THB106.5-THB107/kg. No arrivals at Surat Thani central market. Total quantity sold in three central markets of Thailand estimated at 15.8 tons versus 14.4 tons Friday: 5.8 tons in Hat Yai, 10 tons in Chandee.

Source: Dow Jones

[Dow Jones] Tocom RSS3 rubber futures hit five-month low on long liquidation, may fall below Y250/kg, traders say. “It”s difficult to chart near-term support because the market hadn”t earlier traded at current low levels this year,” Singapore-based technical analyst says; pegs immediate support at Y245/kg, resistance Y261/kg. Benchmark Tocom October RSS3 rubber futures trading Y9.8 lower at Y252.4/kg, close to intraday low Y252.1/kg, level not seen since December.

Source: Dow Jones

SINGAPORE (Dow Jones)–Asia rubber settled mostly lower Friday as crude oil prices sank to a three-month low in overnight trade and continued moving in negative territory during trading hours.

The benchmark October natural rubber futures on the Tokyo Commodity Exchange settled 2.7% or Y7.2 lower at Y262.2 a kilogram, reversing Thursday”s gains as a stronger yen also weighed.

A stronger yen makes rubber imports cheaper in Japan, so investors take short positions on Tocom.

Weak crude oil prices and the yen”s strength Friday were in part due to lingering concerns over the euro zone”s debt. Crude oil is a key component of synthetic rubber, a competitor to natural rubber.

Tocom”s spot May and nearby June contracts however settled higher, likely on short covering, as supplies are still tight, so investors don”t want to be called on to make delivery on contracts.

Tocom rubber investors are very unlikely to set up new positions at this time of the month for the spot month contract unless they are extremely confident of delivery on time.

Tocom rubber is still in backwardation, with a difference of Y89.5 between the spot May and benchmark October contracts, signalling tighter supplies in the current market.

Backwardation occurs when the difference between forward and spot prices becomes less than the cost of carrying the commodity, or when there is no delivery arbitrage because the asset is not available for purchase.

Prices of RSS3 futures in the nearby months were also higher on the Agricultural Futures Exchange of Thailand.

Ribbed smoked sheet 3-grade futures on Tocom are expected to take cues from key external markets in the next session, said traders.

“Despite (any) upward movement, Tocom rubber will continue to be weighed on by euro-zone problems and fears of further fiscal tightening in China,” said a trader in Tokyo.

Benchmark Tocom rubber futures extended losses in the night session to close 0.6% or Y1.7 lower at Y260.5/kg. The night session is considered part of the next day”s trading.

Benchmark rubber futures on the Shanghai Futures Exchange settled 1.6% lower amid market rumors that the central bank will hike interest rates during the weekend to drain excess liquidity, said Orient Securities Futures analyst He Jing.

Asian physical rubber prices were mostly down on cues from the futures market. It was a relatively quiet trading day with scant buying interest, said various traders.

“Prices are coming off, so buyers seem to want to wait and see if prices fall even further,” said a Phuket-based exporter.

In other news, Malaysia”s natural rubber production in March totaled 70,318 metric tons, 48% higher than a year earlier but still lower than the 16-month high recorded in January, as seasonal wintering between February and April slowed latex output.

Asian Rubber Futures May 14 Change from previous close Tocom Oct RSS3 Y262.2/kg Down 7.2/kg Shanghai Sep SCR5 CNY21,985/ton Down CNY360/ton Thai Dec RSS3 THB90.25/kg Down THB2.55/kg Sicom Jun RSS3 366.5 U.S. cents/kg Up 1.5 U.S. cents/kg Sicom Jun TSR20 281.5 U.S. cents/kg Down 0.1 U.S. cents/kg
The following are physical prices in Asia, quoted in U.S. cents/kg, free on board.

Grade Shipment May 14 May 13 Bids Offers Bids Offers RSS3 Jun/Jul – 350-360 – 350-370 STR20 Jun/Jul – 305 – 295-305 SIR20 Jun/Jul – 277-278 – 282-284.5 SMR20 Jun/Jul – 281-283 – 289 USS3 May THB100.5-THB102.62/kg Closed

Source: Dow Jones