Rubber, set for a fifth monthly gain, climbed as a weakening Japanese currency and limited supply in Thailand, the largest shipper, improved the appeal of the commodity used to make tires and gloves.

May-delivery rubber on the Tokyo Commodity Exchange rose as much as 2.6 percent to 366.4 yen per kilogram ($4,353 a metric ton) before settling at 360.2 yen. The most-active contract, which reached a 30-year high of 383 yen on Nov. 11, surged 10.2 percent this month, the biggest advance since December.

The dollar is poised for its first monthly gain since April against the yen on speculation the U.S. economic recovery is picking up and as tension on the Korean peninsula intensifies. Wet weather in southern Thailand continues to cut supply, boosting prices, according to the Rubber Research Institute of Thailand. The south accounts for about 80 percent of production.

“The weakening tone of the yen and higher crude oil prices continue to support rubber,” said Varut Rungkhum, analyst at commodity broker Agro Wealth Ltd. “Persistent rainfall is likely to worsen the low supply situation in Thailand,” he said by phone today from Bangkok.

Supply from the Association of Natural Rubber Producing Countries, which accounts for about 92 percent of global output, may drop 3.8 percent in the three months to Dec. 31 as rains have disrupted tapping in Thailand, the group said on Nov. 25.

Output from Thailand is estimated to tumble by 28 percent during October-to-December period, which will lower production this year by 1.4 percent to 3.12 million tons, the group said.

The cash price of natural rubber in Thailand was unchanged at 131.55 baht ($4.35) per kilogram today. Auctioned prices of ribbed smoked sheets rose 0.4 percent to 123.45 baht, boosted by a weakening yen and a supply shortage, the Rubber Research Institute of Thailand said today on its website.

Limited Gains

Futures in Shanghai fell as much as 3.8 percent to 29,500 yuan ($4,425) a ton before closing 0.8 percent higher at 30,880 yuan. The contract, which reached a record on Nov. 11, is set for the fifth monthly advance.

Gains were limited on concern that the European debt crisis will spread and speculation that China will raise interest rates, Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co. said by phone from Bangkok.

European governments’ 85 billion-euro ($111 billion) bailout package for Ireland failed to quell market turmoil, menacing the euro as stocks, bonds and the currency declined.

China’s recent increases in the reserve requirement ratio for banks won’t be enough to reverse excessive liquidity in the system, Zhong Jiyin, an economist with the Chinese Academy of Social Sciences, wrote in a commentary in the China Daily today. China needs to raise interest rates by another 200 basis points, or 2 percentage points, to curb inflation given existing excess liquidity, Zhong wrote.

Source: Bloomberg

TOKYO, Nov 29 (Reuters) – Key Tokyo rubber futures inched higher on Monday, helped by the yen weakening against the dollar and a rise in oil prices.

FUNDAMENTALS

* The key Tokyo Commodity Exchange rubber contract for May delivery <0#JRU:> advanced 0.7 yen, or 0.2 percent, to 355.9 yen per kg as of 0012 GMT.

* The May contract fell as much as 11 yen, or 3 percent, to 351.7 yen on Friday. It settled at 355.2 yen for a weekly loss of 4.3 percent, the biggest since early July, according to Reuters data.

* The Shanghai Futures Exchange said on Thursday it will raise margin requirements and widen daily price move limits on its contracts from next week. [ID:nSGE6AO0G6]

* Traders said such a move could trigger liquidation of speculative positions.

* The most active Shanghai rubber futures contract for May delivery fell by its limit and settled at 30,375 yuan ($4,567) per tonne on Friday, down from Thursday’s close of 31,280 yuan. Volume stood at 764,610 lots.

* Oil rose to above $84 a barrel on Monday, after edging lower in light post-holiday trading in the United States on Friday when Europe’s debt crisis pushed the euro to a two-month low against the dollar. But pipeline and refinery snags and geopolitical tensions helped limit oil’s losses. [O/R]

* The dollar rose to its highest in two months against the yen on Monday at above 84.18 yen . A weaker yen supports yen-priced TOCOM futures as it inflates their yen value. [USD/]

MARKET NEWS

* Japanese retail sales fell 0.2 percent in October from a year earlier, below a median market forecast for a 0.7 percent annual increase, government data showed on Monday. [ID:nTKZ006654]

* South Korea’s top automaker Hyundai Motor Co <005380.KS> and its Chinese partner broke ground on Sunday for a third plant to ease their undercapacity in the world’s largest auto market. [ID:nTOE6AR01F]

* Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.7 percent from a week earlier, the exchange said on Friday. [ID:nBJD000130]

* Japan’s benchmark Nikkei stock average <.N225> opened up 0.36 percent at 10,075.66 on Monday, while the broader Topix <.TOPX> gained 0.22 percent to 868.69. [.T]

* S&P 500 stock index futures rose at the start of trade on Sunday after the EU approved an 85 billion euro ($115 billion) rescue for Ireland. [.N]

Source: Reuters

Rubber slumped as China, the largest user, will raise commodity futures margins to cool prices and as growers in Indonesia, the second-biggest exporter, boost output to benefit from record prices.

May-delivery rubber on the Tokyo Commodity Exchange fell as much as 3 percent to 351.7 yen per kilogram ($4,191 a metric ton) before settling at 355.2 yen. The most-active contract, which reached a 30-year high of 383 yen on Nov. 11, is set for the worst weekly loss since July 2. Futures in Shanghai tumbled by the daily limit to the lowest level since Oct. 13.

The Shanghai Futures Exchange will increase margins and daily price limits in the latest move by China to curb speculation and cool inflation. Margins on rubber will rise to 13 percent after the market closes on Nov. 29, the bourse said in a statement. Daily price limits will widen to 6 percent from Nov. 30, according to the exchange.

“China is adding steps to curb inflation, boosting speculation that their demand may weaken,” Takaki Shigemoto, an analyst at JSC Corp. in Tokyo, said today by phone. “Investors are becoming concerned that market fundamentals won’t be as tight as earlier expected.”

Natural rubber supply this year may be more than forecast last month as growers in Indonesia boost output to benefit from record prices, the Association of Natural Rubber Producing Countries said in an e-mailed statement yesterday.

Increased Output

Production may increase 6.6 percent to 9.5 million tons, more than the 9.4 million tons forecast on Oct. 27, the producers group said. Supply may drop 3.8 percent in the three months to Dec. 31 as rain disrupts tapping in Thailand, the biggest producer and exporter, it said.

May-delivery rubber in Shanghai lost as much as 2.9 percent to close at a daily limit of 30,375 yuan ($4,560) a ton. The price reached a record 38,920 yuan on Nov. 11.

China, the biggest consumer of commodities, pledged to control prices and may raise interest rates a second time this year to slow the fastest inflation in two years and curb food costs that jumped 10.1 percent in October.

China’s consumption of natural rubber, including compound rubber, may drop 2 percent in the fourth quarter as the government takes steps to cool commodity prices, the association of producer countries said. Imports of all forms of natural rubber may climb 7.1 percent to 3.26 million tons this year and gain 6 percent to 3.45 million tons in 2011, the group said.

“Natural rubber markets do not appear to have received any notable support from the demand side,” Jom Jacob, the group’s senior economist, said in the statement. “Concerns over China’s new policy measures clouded demand expectations.”

The cash price of natural rubber in Thailand remained unchanged at 131.55 baht ($4.38) per kilogram today, as concern over Chinese measures to curb inflation was offset by limited supply, according to the Rubber Research Institute of Thailand. The price reached a record 132.75 baht per kilogram on Nov. 23.

Source: Bloomberg

Rubber increased as improvement in U.S. employment and consumer sentiment boosted speculation that demand will expand for the commodity used in tires, and as supply is limited from Thailand, the largest exporter.

April-delivery rubber on the Tokyo Commodity Exchange gained as much as 2.6 percent to 368.7 yen per kilogram ($4,419 a metric ton) before settling at 362.6 yen. The price reached a 30-year high of 383 yen on Nov. 11.

Asian stocks advanced after data showed U.S. jobless claims dropped to the lowest level since 2008, bolstering optimism that economic growth will accelerate. Rubber supply from Thailand and other Asian producers remains tight after rain and flooding disrupted plantation work, said Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co. in Tokyo.

“The market drew support from good economic data from the U.S.,” Saito said by phone today. “Fundamentals remain positive as supply is curbed by weather problems.”

The cash price of natural rubber in Thailand gained 0.2 percent to 131.55 baht ($4.38) per kilogram today, boosted by strong demand amid a supply shortage, according to the Rubber Research Institute of Thailand. The price reached a record 132.75 baht per kilogram on Nov. 23.

The U.S. Labor Department said jobless claims fell to 407,000 last week. The median projection of economists surveyed by Bloomberg News called for a drop to 435,000. The Thomson Reuters/University of Michigan final index of November consumer sentiment increased to 71.6, the highest level since June and exceeding the median economist estimate of 69.5.

Shanghai Futures

May-delivery rubber in Shanghai lost 1.8 percent to 31,690 yuan ($4,765) a ton at 2:42 p.m. local time. The price retreated from a record 38,920 yuan on Nov. 11 on concern that China, the largest consumer, may take additional steps to curb inflation and slow its economic growth, Saito said.

China’s central bank said it will strengthen liquidity management and “normalize” monetary conditions after having twice this month ordered banks to hold more in reserves to curb inflation that’s at a two-year high.

The nation will use quantitative and price tools to manage liquidity, Hu Xiaolian, a deputy governor of the People’s Bank of China, said in a statement posted to the central bank’s website yesterday. China will also control the pace of bank lending for the remainder of this year as it will be difficult to stay within the government’s 7.5 trillion yuan ($1.13 trillion) target for new loans in 2010, she said.

Premier Wen Jiabao’s government has raised interest rates, increased the reserve requirement for banks and pledged to use price controls if needed as part of efforts to rein in inflation that reached 4.4 percent last month. Analysts at nine banks surveyed by Bloomberg News last week predicted the PBOC will boost borrowing costs a second time by the end of the year.

China’s recent moves to crack down on speculation in commodities have worked, and prices of goods from cotton to copper have all declined, the National Development and Reform Commission said in a statement on its website today.

Source: Bloomberg

Rubber declined for the first time in four days on concern that China’s measures to tame inflation may curb demand from the world’s largest user and after North Korea attacked South Korea, weakening investor risk appetite.

April-delivery rubber on the Tokyo Commodity Exchange slumped as much as 3.6 percent to 356.4 yen per kilogram ($4,283 a metric ton) before settling at 359.5 yen. It also dropped as Standard & Poor’s Ratings Services cut Ireland’s credit rating, raising concern that Europe’s debt crisis may stall the region’s economic recovery. The market was closed yesterday for a holiday.

China will crack down on the use of loan funds in speculation, hoarding and artificially inflating prices of agricultural products, the China Banking Regulatory Commission said on Nov. 22, sending rubber futures in Shanghai tumbling by the daily limit yesterday. South Korea’s stocks and currency sank after North Korea fired artillery, killing two soldiers.

“Rubber was sold as tension in Korea sapped investor appetite for risk assets,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone. “Caution about China’s steps to curb inflation was another drag on rubber futures.”

May-delivery rubber fell as much as 2.9 percent to 31,300 yuan ($4,707) a ton before gaining 0.2 percent to close at 32,285 yuan on the Shanghai Futures Exchange. The contract reached a record 38,920 yuan on Nov. 11.

China, the biggest buyer, ordered banks on Nov. 19 to set aside larger reserves for the second time in two weeks. The move to contain excess liquidity came after Premier Wen Jiabao held a Cabinet meeting earlier in the week and called for a crackdown on speculation in agricultural goods, saying price controls may be needed on “daily necessities.”

China Controls

China’s cabinet said last week it may impose temporary price controls after inflation gained the most since September 2008 and food prices climbed 10.1 percent.

Rubber in Tokyo has climbed 32 percent this year as heavy rain in Thailand, Indonesia and Malaysia, the top three growers, disrupted tapping and lowered production.

The cash price of natural rubber in Thailand, the largest producer and exporter, fell 1.1 percent to 131.25 baht ($4.36) per kilogram today as worries over China attempt to curb inflation and Ireland debt crisis prompted investors to reduce position in agricultural contracts, according to the Rubber Research Institute of Thailand. The downside is limited because of supply shortage from major producers, it said. Thai price yesterday reached a record 132.75 baht per kilogram.

Ireland’s debt rating was lowered two steps by Standard & Poor’s, with a negative outlook, as the nation’s bailout of its banking system is set to escalate the government’s borrowing needs. Ireland is hammering out an aid package with the EU and the International Monetary Fund to rescue its banking system.

Source: Bloomberg