Rubber gained for a third day to the highest price in almost five months after the Federal Reserve said it may ease monetary policy further to spur growth, boosting the demand outlook for the commodity used in tires.

Futures in Tokyo advanced as much as 2 percent to 311.5 yen per kilogram ($3,669 a metric ton), the highest level since April 28. The price jumped 3 percent yesterday, the largest gain in two months, on expectations that the global market is set for the worst shortage in four years next year.

The Federal Open Market Committee said yesterday that it is “prepared to provide additional accommodation if needed to support the economic recovery.” The dollar weakened and gold climbed to a record for a fifth day on speculation Chairman Ben S. Bernanke will purchase additional U.S. government securities in the coming months in a bid to lower long-term interest rates.

“The statement boosted speculation that the Fed may ease monetary policy further to support the economy, which is positive for commodities,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.

February-delivery rubber rose as much as 6.1 yen, before settling at 309.7 yen on the Tokyo Commodity Exchange.

“The Fed’s remarks spurred optimism that demand for the rubber may grow,” said Sureerat Kunthongjun, an analyst at Agrow Enterprise Ltd. “Supplies remain limited in top producing nations as rains disrupted tapping, lowering production,” she said by phone from Bangkok.

Heavy Rains

The cash price in Thailand, the largest exporter, advanced for a third day, rising 0.7 percent to 108.35 baht ($3.54) per kilogram as rains continue in the country’s main plantation areas, limiting supply availability, the Rubber Research Institute of Thailand said on its website today. Some companies accelerated purchases to ensure they meet delivery commitments, the institute said.

Drought earlier this year followed by heavy rains have hampered tree-tapping across plantations in Asia, according to Pongsak Kerdvongbundit, managing director of Phuket, Thailand- based Von Bundit Co.

Persistent rains will probably continue across the country in the second half of September, the Thai weather office said on its website.

Natural-rubber consumption will outpace supply by 127,000 tons next year, the widest production deficit since 2007, according to Goldman Sachs Group Inc. Stockpiles will drop 12 percent to 67 days of demand in 2011, the lowest level in at least 11 years, the bank estimated in a report this month.

“While supply remains tight throughout this year, the possibility of change is remote in 2011 also,” Jom Jacob, senior economist at the Association of Natural Rubber Producing Countries, said in a monthly statement yesterday.

The Shanghai rubber market is closed today for a holiday. The March-delivery contract advanced to 26,920 yuan ($4,024) a ton yesterday, the highest level since July 2008.

Source: Bloomberg

Rubber advanced to the highest level in almost five months amid expectation that the global market is set for the worst shortage in four years next year as weather constrains supply and demand keeps expanding.

Futures in Tokyo climbed as much as 3.2 percent to the highest level since April 30. The price increased for a second day and has gained 10 percent this year.

Natural rubber consumption will outpace supply by 127,000 metric tons next year, the most since 2007, according to Goldman Sachs Group Inc. Stockpiles of the raw material used in tires, gloves and condoms will drop 12 percent to 67 days of demand in 2011, the lowest level in at least 11 years, the bank estimates. Drought earlier this year and heavy rainfall later on hampered tree-tapping across plantations in Asia, according to Pongsak Kerdvongbundit, managing director of Phuket, Thailand-based Von Bundit Co., the largest producer.

“The bullish outlook from the bank helped boost the futures,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Market fundamentals look tight in the medium term.”

February-delivery rubber rose as much as 9.4 yen to 305.9 yen per kilogram ($3,574 a metric ton) before trading at 304 yen on the Tokyo Commodity Exchange at 11:18 a.m.

October-delivery rubber surged by as much as 10 yen per kilogram, triggering a circuit breaker by the bourse and leading to suspension in futures trading for five minutes.

Global consumption will advance 9.4 percent this year to 10.31 million tons, the fastest increase since 2004, according to the Singapore-based International Rubber Study Group, which says it has 16 countries and the European Union as contributing members. Demand will exceed output by 60,000 tons, from a surplus of 237,000 tons last year.

Floods

Sales of rubber are increasing the most in six years, helped by what the International Monetary Fund says will be the fastest global economic growth since 2007. Rain and flooding in Thailand and Indonesia, the top producers, drenched farms and curbed harvesting.

“La Nina will decrease” rubber production, Jakarta-based PT Mandiri Sekuritas said in today’s report. “Rubber production will decrease because the tapping process cannot be done in heavy rain.”

Futures may climb as much as 14 percent to $4 a kilogram by March on the Singapore Commodity Exchange, according to the median estimate of nine brokers and analysts surveyed by Bloomberg. The price in Tokyo is expected to return to this year’s peak of 338.5 yen reached on April 16, the highest level in 21 months, Kazunori Kokubo at Tokyo-based broker Yutaka Shoji said today by phone.

March-delivery rubber on the Shanghai Futures Exchange lost 0.4 percent to 26,415 yuan ($3,938) a ton at 10:34 a.m. local time. Natural-rubber inventories climbed 2,195 tons to 27,415 tons, the exchange said on Sept. 17, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin.

Source: Bloomberg

[Dow Jones] Physical prices of Thai USS3 rubber rise to THB100.82-THB101.85/kg vs THB100.44-THB101.25/kg Friday as Shanghai rubber futures rally; but gains capped with exporters bidding cautiously, higher export levy to kick in Oct. 1 fuels concerns Thai rubber prices to rise, reducing competitiveness vs other regional grades; public holiday in China Wednesday-Friday also keeps exporters on toes as may slow demand, trader in south Thailand says. Outside central markets, factories paying around THB102.5-THB103.3/kg. Total quantity sold in three central markets of Thailand estimated at 62.2 tons versus 39.8 tons Friday: 19.2 tons in Hat Yai, 14 tons in Surat Thani, 29 tons in Chandee.

Source: Dow Jones

Rubber gained, climbing for the first week in three, as the yen weakened against the dollar and signs that economic recovery will be sustained boosted the appeal of the commodity used to make tires.

Futures in Tokyo advanced as much as 1.8 percent, gaining for the first time in three days, as a drop in the dollar against the euro renewed investor interest in commodities as alternative assets.

The yen fell to a five-week low against the euro before reports that economists said will show German producer prices rose and U.S. consumer confidence improved, sapping demand for safer assets. Asian stocks advanced as a weak yen boosted the outlook for Japan’s exporters.

“Rubber futures draw support from the currency and equity markets,” said Takaki Shigemoto, an analyst at JSC Corp. in Tokyo. “A pessimistic view about the economy is fading as Japan took action to support a recovery.”

February-delivery rubber gained as much as 5.2 yen to 298 yen per kilogram ($3,473 a metric ton) before settling at 296.5 yen on the Tokyo Commodity Exchange.

“Easing worries over economic situation helped improve appetite for the commodity,” Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co., said by phone.

Yen Weakens

The yen weakened to 85.91 per dollar against 85.78 in New York yesterday. Japan sold the currency this week after it climbed to 82.88, the strongest since May 1995, threatening the nation’s export-led economic recovery. Prime Minister Naoto Kan said yesterday his government won’t tolerate “rapid movements” in the yen and is ready to take “decisive measures.”

German producer prices gained 0.3 percent in August from July, when they climbed 0.5 percent, according to a Bloomberg News survey before the report today.

The Thomson Reuters/University of Michigan preliminary index of U.S. consumer sentiment advanced to 70 in September from 68.9 in August, another Bloomberg survey showed before today’s data.

Gains in rubber futures were limited as the nearest-dated contract in Tokyo extended losses amid speculation that physical deliveries may increase when the contract expires.

September-delivery rubber on the Tokyo Commodity Exchange, which will expire on Sept. 24, slumped as much as 1.2 percent to settle at 286 yen, extending losses for a third day.

Investors sold the contract amid speculation that as much as 2,570 tons of rubber may be delivered when it expires, Shigemoto said. The volume could more than double from 1,080 tons of physical delivery at the spot contract’s expiry last month, according to Norikazu Takei, a Tocom spokesman.

March-delivery rubber on the Shanghai Futures Exchange surged 3.2 percent to close at 25,985 yuan ($3,863) a ton, the highest close since Sept. 8.

Source: Bloomberg

Rubber dropped for a second day, led by a slump in the nearest-dated contract, amid speculation that physical deliveries may increase when the contract expires next week.

September-delivery rubber on the Tokyo Commodity Exchange, which will expire on Sept. 24, plunged as much as 4.7 percent to 284 yen per kilogram ($3,324 a metric ton), extending yesterday’s 1.8 percent drop, before settling at 289.5 yen.

Investors sold the contract amid speculation that as much as 2,570 tons of rubber may be delivered when it expires, said Takaki Shigemoto, an analyst at JSC Corp. in Tokyo. The volume could more than double from 1,080 tons of physical delivery at the spot contract’s expiry last month, according to Norikazu Takei, a Tocom spokesman.

“The market was weighed down by concern that a larger volume of rubber deliveries may depress prices,” Shigemoto said by phone today.

February-delivery rubber, the most-active contract on the Tokyo exchange, lost as much as 1.3 percent to 292 yen per kilogram before settling at 292.8 yen.

Futures also declined as crude oil dropped, weakening the appeal of natural rubber as an alternative to synthetic products used in tires. Oil fell for a third day in New York after a U.S. government report showed fuel demand declined last week and as Enbridge Energy Partners LP prepared to restart a pipeline after repairs, easing supply concerns.

Crude for October delivery fell as much as 1.3 percent to $75 a barrel in electronic trading on the New York Mercantile Exchange in Asia.

Weak Data

Worse-than-expected economic data in the U.S. renewed concerns that the world’s largest economy may slow, hurting demand for raw materials, Shigemoto said.

Industrial production in the U.S. cooled in August to 0.2 percent after a 0.6 percent gain in July that was smaller than previously estimated, figures from the Federal Reserve showed. A separate report showed manufacturing in the New York region expanded this month at the slowest pace in more than a year.

March-delivery rubber on the Shanghai Futures Exchange dropped 0.5 percent to close at 25,170 yuan ($3,740) a ton.

Auctioned prices in Thailand declined as a strengthening local currency made the commodity more expensive for overseas buyers, according to the Rubber Research Institute of Thailand. Price of ribbed smoked sheets dropped 0.5 percent to 104.50 baht ($3.39) per kilogram, it said.

Source: Bloomberg