Rubber declined, paring a monthly gain, as futures in Shanghai slumped amid concern that China may tighten trading rules to curb excessive speculation and data showed Japan’s industrial production dropped at a faster pace.

The most-active contract lost as much as 1.5 percent to 331.6 yen per kilogram ($4,122 a metric ton) before trading at 332.4 yen on the Tokyo Commodity Exchange at 11:19 a.m. Futures have gained 6.5 percent this month, heading for the best performance since August, and increased 20 percent this year.

Futures in Shanghai tumbled amid speculation that China may take additional steps to curb raw materials prices. The Zhengzhou Commodity Exchange increased the margin requirement for rice, rapeseed oil, wheat and sugar trading on Oct. 26. The action came after the bourse said it would track “abnormal” trading and recommend investigation by watchdogs.

“Caution about Chinese regulation was the largest drag on the price of rubber futures,” Takaki Shigemoto, an analyst at JSC Corp. in Tokyo, said today by phone.

Chinese policy makers have grappled with rising consumer prices and property-price gains after record lending and a 4- trillion yuan stimulus package pumped up growth during the financial crisis. Consumer prices rose 3.6 percent last month.

May-delivery rubber on the Shanghai Futures Exchange slumped as much as 4.8 percent to 30,765 yuan ($4,607) a ton before trading at 31,265 yuan at 10:15 a.m. local time. The price climbed to a record 33,320 yuan on Oct. 26.

Japan’s Factories

Rubber futures also declined as data showed Japan’s industrial production fell for a fourth month in September, raising concern its demand for the commodity used in tires may weaken, Shigemoto said.

Factory output decreased 1.9 percent from August, when it dropped 0.5 percent, the Trade Ministry said in Tokyo today. The median estimate of 27 economists surveyed by Bloomberg News was for a 0.6 percent decline.

Manufacturers including Toyota Motor Corp. and Honda Motor Co. are grappling with the appreciation of the yen, which has gained more than 5 percent even after the government intervened in the foreign-exchange market last month. Japan’s exports grew at the slowest pace this year in September as global demand cooled, a government report showed this week.

Losses were limited as rain may cause flash floods and landslides in 15 southern provinces in Thailand before the end of the month, the Department of Disaster Prevention and Mitigation said. About 68 percent of rubber plantation areas are in the south of Thailand, the largest producer and exporter.

A natural-rubber supply shortage will likely “worsen” in the fourth quarter as unseasonal rainfall continues to disrupt production from key growers, the Association of Natural Rubber Producing Countries said.

Global rubber production this year is unlikely to increase more than 5.3 percent to 9.4 million tons, from a previous forecast of 6.3 percent, the association said. A further cut in output is expected because of tapping disruptions in Malaysia, Thailand and India, the group said.

Source: Bloomberg

Rubber pared an earlier drop as Thailand’s most severe floods in five decades raised concerns that supply will likely tighten, boosting prices.

The April-delivery contract settled little changed at 336.8 yen per kilogram ($4,145 a metric ton) on the Tokyo Commodity Exchange after declining as much as 0.9 percent. Rubber has climbed 8.2 percent this month on concern that rain in major producing countries will cut production amid robust demand. Futures surged 22 percent this year.

“Rain continues in southern Thailand and other producing countries, disrupting latex tapping and lowering production,” Umaporn Thepnuan, senior marketing official at Future Agri Trade Co., said by phone from Bangkok.

Cyclones and heavier-than-normal monsoon rains have deluged parts of Southeast Asia this month, killing hundreds of people in key rubber-producing countries. Heavy rain may cause flash floods and landslides in 15 southern provinces in Thailand before the end of the month, the Department of Disaster Prevention and Mitigation warned. About 68 percent of rubber plantation areas are in the country’s south.

A natural-rubber supply shortage will likely “worsen” in the fourth quarter as unseasonal rainfall continues to disrupt production from key growers, the Association of Natural Rubber Producing Countries said.

Global rubber production this year is unlikely to increase more than 5.3 percent to 9.4 million tons, from a previous forecast of 6.3 percent, the association said. A further cut in output is expected because of tapping disruptions in Malaysia, Thailand and India, the group said.

Output Falls

Output in Thailand, the largest producer and exporter, is estimated to fall 3.9 percent in the fourth quarter to 933,000 tons, the group said in a monthly bulletin.

Output in China and India is expected to contract during October to December because of heavy rain, the group said. India has scaled down its production forecast this year to 844,000 tons from 879,000 tons estimated earlier, while China cut its 2010 output forecast to 641,000 tons, a decline of 0.3 percent from the previous year, the group said.

“This is positive for rubber prices because supply is declining as China and Japan build up stockpiles, ahead of wintering season when producers stop tapping,” Sureerat Kunthongjun, analyst at AGROW Enterprise Ltd., said by phone from Bangkok. Futures may extend their rally to 357 yen, the highest level since June 2008, by the end of the year, she said.

Shanghai Soars

The auctioned price of unsmoked rubber sheet in Thailand rose 0.2 percent to 109.76 baht ($3.66) a kilogram as investors are worried over supply shortages amid persistent purchases from China, the Rubber Research Institute of Thailand said on its website today. Prices will likely climb further, it said.

Shanghai futures advanced as much as 4.1 percent to 32,495 yuan ($4,858) a ton before closing at 32,320 yuan. The contract, which reached a record 33,320 yuan Oct. 26, slumped as much as 4.4 percent yesterday on concerns that China, the largest buyer, may impose stringent measures to limit speculation and lower commodity prices.

“Investors are still worried the Chinese government may impose measures to reduce high prices of commodities,” Gu Jiong, analyst at broker Yutaka Shoji Co., said by phone from Tokyo.

The Zhengzhou Commodity Exchange increased the margin requirement on Oct. 26 for rice, rapeseed oil, wheat and sugar trading to 8 percent from 3 percent or 4 percent. The exchange will track “abnormal” trading and recommend investigation by watchdogs, a separate statement dated Oct. 25 said.

China’s increased liquidity after the financial crisis and government curbs on property investments have stoked commodity prices. In the past five months, cotton in Zhengzhou advanced 59 percent, rubber in Shanghai gained 48 percent, while Dalian soybean oil rose 15 percent.

Source: Bloomberg

Oct. 27 (Bloomberg) — A natural rubber supply shortage will likely “worsen” in the fourth quarter as unseasonal rainfall continues to disrupt production from key growers, the Association of Natural Rubber Producing Countries said.

Tightening supply emerged at a time when stockpiles of China, the world’s largest buyer of natural rubber, were 73 percent lower than this year’s high, potentially bolstering prices to 28-month high. The commodity used to make tires and gloves surged 22 percent this year as wetter-than-normal weather lowered production of major producers.

“Marked change in supply scenario is remote in 2011 given the fact that yielding area is unlikely to expand before 2012,” Jom Jacob, the group’s senior economist, said in the statement.

Global rubber production this year is unlikely to increase more than 5.3 percent to 9.4 million tons, from a previous forecast of 6.3 percent, the association said. A further cut in output is expected because of tapping disruptions in Malaysia, Thailand and India, the group said.

Rubber futures on the Tokyo Commodity Exchange advanced to a 27-month high of 343.3 yen per kilogram ($4,206 a metric ton) yesterday, while rubber futures in Shanghai reached a record 33,320 yuan ($4,989) a ton on speculation China will step up purchases to replenish stockpiles amid concerns over declining supplies from floods and heavy rains.

The April-delivery contract in Tokyo declined 1.2 percent to 336.1 yen per kilogram at 2:57 p.m. local time. The Shanghai contract retreated 2.5 percent to 31,850 yuan a ton.

“This is positive to the rubber prices because supply declines during the time China and Japan build up stockpiles, ahead of wintering season when producers stop tapping,” Sureerat Kunthongjun, an analyst at AGROW Enterprise Ltd., said by phone from Bangkok. Tokyo prices may extend their rally to 357 yen, the highest level since June 2008, around the end of the year, she added.

Output to Contract

Output in Thailand, the largest producer and exporter, is estimated to fall 3.9 percent in the fourth quarter to 933,000 metric tons, the group said in a monthly bulletin.

Production in China and India is expected to contract in October to December because of heavy rain, the group said. India has scaled down its output forecast this year to 844,000 tons from 879,000 tons, while China cut its output forecast to 641,000 tons in 2010, a decline of 0.3 percent from the previous year, the group said.

Trees couldn’t be tapped for 11 days in October following persistent rains in China’s southern island of Hainan, the nation’s main growing area, resulting in an estimated crop loss of about 15,000 tons, the group said.

Natural rubber imports by China are expected to surge 42 percent in the fourth quarter, while imports by India and Malaysia are expected to tumble by 12 percent and 37 percent, respectively, the group said.

Natural rubber inventories increased by 3,880 tons to 41,681 tons, the highest level in six months, the Shanghai Futures Exchange said on Oct. 22, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin. That was 73 percent lower than this year’s high of 151,832 tons in January.

Higher interest rates in China have raised concerns over the demand growth for natural rubber of the largest buyer, which accounts for more than 33 percent of global consumption, the group said.

Source: Bloomberg

Rubber slumped on concern that China may tighten trading rules to curb excessive speculation, and as a stronger dollar reduced the appeal of commodities as alternative assets.

The April-delivery contract declined as much as 1.4 percent to 335.7 yen per kilogram ($4,107 a metric ton) on the Tokyo Commodity Exchange before settling at 337 yen. Shanghai futures plunged as much as 4.4 percent to 31,210 yuan ($4,669) a ton after reaching a record 33,320 yuan yesterday.

Commodities in China snapped a rally as the Zhengzhou Commodity Exchange yesterday increased the margin requirement for rice, rapeseed oil, wheat and sugar trading to 8 percent from 3 percent or 4 percent. The exchange will track “abnormal” trading and recommend investigation by watchdogs, a separate statement dated Oct. 25 said.

“Rubber came under pressure amid speculation that China may be attempting to cap raw materials prices to curb inflation,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.

China’s increased liquidity after the financial crisis and government curbs on property investments have stoked commodity prices. In the past six months, cotton in Zhengzhou returned 61 percent, rubber in Shanghai gained 34 percent, zinc in Shanghai rose 9.2 percent, while Dalian soybean oil rose 20 percent.

“The government has had to battle anything from speculation in mung beans to garlic in the past and has shown increasing signs of wanting to intervene in futures,” Tommy Xiao, analyst at Shanghai JC Intelligence Co., said by phone from Shanghai. “But it’s like the game Whack-A-Mole: as they knock down one product, another one pops up.”

Dollar Strength

Rubber futures also declined because of a strengthening dollar, said Chaiwat Muenmee, analyst at commodity broker D.S. Futures. The dollar rose to a one-week high against the euro amid speculation more debt purchases by the Federal Reserve will help revive economic growth.

The dollar gained as high as $1.3771 per euro, the most since Oct. 20, before trading at $1.3793 at 4:44 p.m. in Tokyo.

The U.S. economy probably grew at a faster pace in the third quarter. Gross domestic product rose at a 2 percent annual pace, up from a 1.7 percent rate in the previous three months, according to the median forecast of economists surveyed by Bloomberg News before the Oct. 29 Commerce Department report.

The rubber cash price in Thailand gained 0.2 percent to 120.55 baht ($4.02) per kilogram today, boosted by worries that increasing rains in Thailand’s southern provinces will lower production amid persistent demand from processors, the Rubber Research Institute of Thailand said on its website. Prices will likely advance in the short term, the institute said.

Losses Limited

Rubber losses may be limited as reports on tightening supply should support prices, Chaiwat at D.S. Futures said. Rain continues to disrupt tapping among key producers, he said.

A natural rubber supply shortage will likely “worsen” in the fourth quarter as unseasonal rainfall continues to disrupt production from key growers, the Association of Natural Rubber Producing Countries said.

Output in Thailand, the largest producer and exporter, is estimated to fall 3.9 percent in the fourth quarter to 933,000 tons, the group said in a monthly bulletin.

Output in China and India is expected to contract during October to December because of heavy rain, the group said. India has scaled down its production forecast this year to 844,000 tons from 879,000 tons estimated earlier, while China cut its 2010 output forecast to 641,000 tons, a decline of 0.3 percent from the previous year, the group said.

Global rubber production this year is unlikely to increase more than 5.3 percent to 9.4 million tons, from a previous forecast of 6.3 percent, the association said. A further cut in output is expected because of tapping disruptions in Malaysia, Thailand and India, the group said.

“Marked change in supply scenario is remote in 2011 given the fact that yielding area is unlikely to expand before 2012,” Jom Jacob, the group’s senior economist, said in the statement.

Source: Bloomberg

Rubber futures in Tokyo advanced to a 27-month high on speculation that China, the world’s largest buyer, will increase purchases to replenish stockpiles amid concerns over declining supplies from floods and heavy rains. Shanghai rubber reached a record.

The April-delivery contract, which was listed today on the Tokyo Commodity Exchange, climbed to 343.3 yen per kilogram ($4,252 a metric ton), the highest level since July 14, 2008, before trading at 339.3 yen at 12:05 p.m. Rubber futures in Shanghai surged to a record 33,320 yuan ($5,002) a ton before trading at 33,165 yuan.

“Stockpiles remain at a low level, prompting buyers to step up purchases,” Chaiwat Muenmee, analyst at commodity broker D.S. Futures, said by phone from Bangkok. “Floods in Thailand and China also raised concerns that production may be damaged, reducing limited supplies.”

Stockpiles held at Japanese warehouses fell 0.7 percent to 7,355 tons on Oct. 10, according to data today from the Rubber Trade Association of Japan.

Natural rubber inventories increased by 3,880 tons to 41,681 tons, the highest level in six months, the Shanghai Futures Exchange said on Oct. 22, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin. That was 73 percent lower than this year’s high of 151,832 tons in January.

Torrential rains this month in Hainan after a severe drought in Yunnan at the beginning of this year, the top two producing areas in China, will reduce domestic rubber output, according to Guo Cheng, an analyst at Yongan Futures Co.

Natural rubber imports by China jumped 19 percent from a month earlier to 190,000 tons in September as the country’s passenger-car sales to dealerships quickened from August on additional incentives for buyers.

Wholesale deliveries of passenger cars rose 19.3 percent to 1.21 million, accelerating from 18.7 percent in August, the China Association of Automobile Manufacturers said Oct. 12.

Source: Bloomberg