Rubber dropped from a four-month high as the Japanese currency strengthened and crude oil extended its decline, weakening the appeal of the commodity used to make tires.

Futures in Tokyo lost as much as 1 percent after reaching 302.5 yen per kilogram ($3,592 a metric ton) yesterday, the highest level since April 30.

Oil dropped for a second day on speculation that fuel demand will decline as the U.S. summer peak consumption season ends. U.S. crude inventories last week increased to the highest level since June, according to the Energy Department.

“Rubber was dragged down by losses in the energy and equities markets,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone. “Risk appetite of investors is still weak as concern about U.S. economic growth remains.”

February-delivery rubber declined as much as 2.9 yen to 299 yen before settling at 299.8 yen on the Tokyo Commodity Exchange. Oil for October delivery fell as much as 1.8 percent to $73.29 a barrel in electronic trading on the New York Mercantile Exchange.

“The stronger yen has reduced the appetite for the commodity,” Sureerat Kunthongjun, an analyst at Agrow Enterprise Ltd., said by phone from Bangkok.

Asian stocks fell for the first time in five days, led by Japanese automakers on concern that the strengthening yen will hurt the value of overseas sales.

Obama Plan

Declines in oil prices overshadowed a stimulus plan proposed by President Barack Obama to help boost the U.S. economy. Obama proposed spending at least $50 billion to rehabilitate U.S. transportation infrastructure to help spur an economy that’s lost jobs for three straight months.

Losses in rubber futures were limited as rain curbed supply in Thailand, the world’s largest producer and exporter.

The Thai cash price climbed 0.9 percent to 109.20 baht ($3.50) per kilogram today, as rubber processors accelerated purchases before a new levy on Thai rubber exports takes effect on Oct. 1, the Rubber Research Institute of Thailand said. Supply availability remains low as persistent rains in rubber plantation areas disrupted tapping, which may drive prices higher, it said.

January-delivery rubber on the Shanghai Futures Exchange lost 0.6 percent to close at 26,390 yuan ($3,868) a ton. It climbed to 26,645 yuan yesterday, the highest level since July 2008, as accelerating growth in China’s car sales raised the outlook for demand.

Natural-rubber inventories monitored by the Shanghai exchange expanded 1,119 tons to 25,820 tons, the bourse said on Sept. 3.

Source: Bloomberg

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