Rubber climbed to near a record on speculation that a price slump yesterday may lure buyers amid lingering worries over tight supply. The cash price remained at an all-time high.

The June-delivery contract advanced as much as 1.1 percent to 412.2 yen per kilogram ($5,010 a metric ton) on the Tokyo Commodity Exchange and settled at 411.1 yen. The price tumbled 2.4 percent yesterday, the biggest drop since Nov. 24. The most- active contract climbed to a record 419.3 yen on Dec. 27.

“It’s a rebound after yesterday’s sharp decline,” said Hiroyuki Kikukawa, the general manager of research at IDO Securities Co. in Tokyo. Gains may be limited as the yen strengthened against the dollar, reducing the value of the Japanese currency-based futures, he said.

The dollar traded near a six-week low against the yen as U.S. data signaled an uneven recovery in the world’s largest economy. The yen gained as much as 0.2 percent to 82.18 per dollar.

The Institute for Supply Management-Chicago Inc. will say tomorrow its business barometer fell to 61 this month from 62.5 in November, according to the median estimate of economists in a Bloomberg News survey. Figures greater than 50 signal expansion.

U.S. consumer confidence fell in December to 52.5, lower than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the Confidence Board showed yesterday.

Supply Concerns

The rubber market has been supported by expectations that a supply shortage may worsen early next year as top exporter Thailand enters a low-production period known as wintering, Kikukawa said.

Latex production in Thailand is set to shrink as growers reduce tapping of rubber trees from February to April. The seasonal drop in output may worsen a supply shortage as global demand will keep rising, led by car sales in China and India.

“Rubber prices are on the upward trend early next year as buyers will build up stocks ahead of wintering season,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said by phone from Bangkok.

Supply of natural rubber from nine producers representing 92 percent of global output is expected to fall 6.3 percent in the fourth quarter, cutting this year’s production growth to 5.7 percent, from 6.6 percent forecast in November, the Association of Natural Rubber Producing Countries said in its monthly bulletin.

Output from the association’s members is estimated at 9.42 million tons this year and may climb to 9.92 million next year, the group said.

‘Speculative Flows’

The tight supply situation continues in Thailand, Indonesia and Malaysia, Ker Chung Yang, an analyst with Phillip Futures Pte, said by phone from Singapore. “Supply concerns will keep speculative flows in the market,” he said.

May-delivery rubber in Shanghai climbed 0.6 percent to close at 36,255 yuan ($5,475) a ton. The price retreated from a record 38,920 yuan on Nov. 11 amid concern that China may take steps to cool inflation and economic expansion.

The cash rubber price in Thailand remained at a record 149.55 baht ($4.96) per kilogram today as persistent rains in the country’s southern provinces limit supplies, the Rubber Research Institute of Thailand said on its website today.

Source: Bloomberg

Rubber declined as investors sold the commodity to lock-in gains after it climbed to a record for a sixth day and as a stronger Japanese currency weakened the appeal of yen-denominated contracts.

June-delivery rubber lost as much as 2.6 percent to 406.6 yen per kilogram ($4,933 a metric ton), the lowest level since Dec. 20, before settling at 407.8 yen on the Tokyo Commodity Exchange. The most-active contract climbed to a record 419.3 yen yesterday, extending this year’s advance to 51 percent.

The dollar dropped to a three-week low against the yen after China raised interest rates for the second time in two months. China’s stocks fell for a fifth day, the longest losing streak since July, on concern the government will raise interest rates further to curb inflation.

“A higher yen spurred sales as the market was ripe for profit-taking,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Concern about further rate increase in China is another drag on futures.”

The Shanghai Composite Index slid 0.9 percent to 2,756.197 at 2:18 p.m. local time, extending yesterday’s 1.9 percent drop, after the People’s Bank of China increased key one-year lending and deposit rates by a quarter percentage point on Christmas Day.

May-delivery rubber in Shanghai dropped 2.5 percent to 36,180 yuan ($5,461) a ton 2:27 p.m. local time. It retreated from a record 38,920 yuan on Nov. 11 amid concern China may take steps to cool inflation and economic expansion.

“Investors’ response towards the rate increase was divided yesterday,” said Deng Changrong, a strategist at Huaxi Securities Co. in Shenzhen. “As the market moves downward, the pessimism and uncertainty seem to get stronger.”

Supply Shortage

Losses in rubber futures were limited by expectations a supply shortage may worsen early next year as top exporter Thailand enters a low-production period, Saito at Fujitomi said.

Latex production in Thailand is set to shrink as growers will reduce tapping of rubber trees from February to April during the so-called “wintering” period. The seasonal drop in output may worsen a supply shortage as global demand will keep rising, led by car sales in China and India.

The cash rubber price in Thailand stayed at a record 149.55 baht per kilogram today after rising 0.3 percent yesterday, boosted by limited supply from the country’s southern provinces amid strong demand for tires, according to the Rubber Research Institute of Thailand.

China Cars

China’s sales of passenger cars including multipurpose and sport-utility vehicles increased 29.3 percent to 1.34 million last month, higher than the previous record of 1.32 million in January, according to the China Association of Automobile Manufacturers. The pace of growth was the fastest since April.

The yen gained to 82.42 per dollar at 3:32 p.m. in Tokyo from 82.81 yesterday. The dollar also came under pressure on speculation a U.S. report today will show home prices fell.

The median forecast of a Bloomberg News survey of economists showed the S&P/Case-Shiller Index of property values dropped 0.2 percent in October from a year earlier, the first decline since January.

China’s central bank raised one-year lending and deposit rates by 25 basis points on Dec. 25 in its second move since mid-October. China may raise rates as many as three times in the first half of next year, according to Morgan Stanley, while JPMorgan Chase & Co. forecasts two increases in that period.

China reported an inflation rate of 5.1 percent for November, the highest in 28 months. Exports last month reached a record $153.3 billion and the trade surplus exceeded $20 billion for the fifth time in sixth months, indicating a recovery in international trade from the global financial crisis.

Source: Bloomberg

TOKYO, Dec 27 (Reuters) – Key Tokyo rubber futures hit a record high on Monday to reverse earlier losses, helped by back of firm Shanghai rubber futures and strong demand at a time when supply is limited, dealers said.
* The key Tokyo Commodity Exchange rubber contract for June delivery <0#2JRU:> rose to a record 419.3 yen per kg before settling at 417.6 yen, up 1 yen or 0.2 percent.
* The contract fell as much as 7.7 yen or 1.8 percent to 408.9 yen in early trade, when other commodities markets were hit by the rate rise announced by China’s central bank on Saturday.
* Traders said the fall offered bargain-hunting opportunities for investors.
* The most active Shanghai May rubber futures contract closed at 37,110 yuan per tonne on Monday, down 190 yuan from Friday’s close. Volume stood at 858,082 lots, down from Friday’s 998,258 lots.
* Asian physical rubber prices were offered higher on Monday, supported by rising TOCOM futures prices and limited supply. [ID:nSGE6BQ00K]
* Spot silver, platinum and palladium reversed earlier losses on bargain-hunting after earlier falling about 1 percent on China’s rate increase.
* Commodity markets pared early losses on Monday in response to an interest rate rise by the People’s Bank of China (PBOC), focusing instead on positive fundamentals and threats to supply. [ID:nL3E6NR040]
* Benchmark agricultural commodity futures on China’s Dalian and Zhengzhou exchanges opened broadly flat on Monday, showing little sign of a sell-off after the People’s Bank of China raised interest rates. [ID:nTOE6BQ02H]
* U.S. crude prices rose to an intraday high of $91.88 a barrel on Monday, the highest level since October 2008, on freezing weather in the U.S. Northeast. [O/R]
* The Australian dollar dipped on Monday after China’s central bank raised rates at the weekend, while the yen also hit a three-week high against the dollar, although thin trading conditions are likely to have exaggerated price moves. [USD/]
* China’s central bank raised interest rates on Saturday for the second time in just over two months as it stepped up its battle to rein in stubbornly high inflation. [ID:nTOE6BO010]
* Top Chinese automaker SAIC Motor Corp <600104.SS> plans to invest 10 billion yuan ($1.51 billion) in its production base in the eastern city of Nanjing in the next five years to boost capacity of its own-brand cars, the China Securities Journal said. [ID:nTOE6BQ03E]
* The tight natural rubber supply situation in the world market “is likely to be aggravated further” in February-May 2011, the group responsible for 92 percent of global output said, as it is seasonally the lean period for tapping. [ID:nSGE6BN074]
* Japan’s Nikkei average <.N225> rose 0.8 percent on Monday in thin trade as an increased appetite for global equities in recent weeks lent support and helped to offset concerns over China’s interest rate hike at the weekend. [.T]

Source: Reuters

Rubber reversed gains after surging to a record for a fourth day as investors sold the commodity to lock-in gains amid concerns over tightening global supply. The Thai cash price gained to an all-time high.

The June-delivery contract, which listed today on the Tokyo Commodity Exchange, advanced to 417 yen per kilogram ($4,975 a metric ton) before settling at 413.5 yen.

“Investors cashed in on profits ahead of a holiday in Tokyo tomorrow,” said Wanwilai Choilek, manager at the Hadyai, Thailand branch of commodity broker DS Futures Ltd. Prices should hover at high level ahead of New Year holidays, she said.

A global supply deficit is still in place, supporting prices, Anand James, chief analyst at brokerage Geojit Comtrade Ltd., said from Kochi, India.

The Thai cash price advanced 1 percent to 148.05 baht ($4.91) per kilogram, the Rubber Research Institute of Thailand said today. Fundamentals remain supportive as supplies are inadequate following persistent rains across major producing countries amid strong demand, the institute said.

Output from Thailand, the world’s biggest exporter, has been hurt by heavy rains and may shrink further as the low- production season starts around February.

“Bullish fundamentals support rubber prices,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Investors are becoming optimistic about the global economic recovery and growth in industrial commodity demand.”

U.S. Recovery

Same-store sales at a selection of U.S. retailers posted their biggest holiday jump, according to a chain-store sales index released by the New York-based International Council of Shopping Centers and Goldman Sachs Group Inc. Holiday retail sales are a key economic indicator in the U.S.

Japan’s export growth accelerated for the first time in nine months as a rebound in global demand helped the nation’s economy withstand an advance in the yen.

Overseas shipments rose 9.1 percent in November from a year earlier, compared with October’s 7.8 percent, the Finance Ministry said today. The rebound eased concern Japan is losing the main driver of a recovery from its worst postwar recession.

May-delivery rubber in Shanghai lost 2.9 percent to close at 37,585 yuan ($5,503) a ton. The contract climbed to a record 38,920 yuan Nov. 11.

Source: Bloomberg

Rubber futures climbed to a record, taking gains this year to 50 percent, on speculation that rising tire demand and supply disruptions from wet weather may worsen a shortage. The cash price also surged to an all-time high.

May-delivery rubber advanced as much as 1.2 percent to 413.8 yen per kilogram ($4,944 a metric ton) on the Tokyo Commodity Exchange, and settled at 413.1 yen. This year’s jump extends 2009’s rally, when prices more than doubled.

Auto sales in China may beat the U.S. for a third straight year in 2011 as the world’s largest carmakers Toyota Motor Corp., General Motors Co. and Volkswagen AG estimate sales will grow by as much as 15 percent. In Thailand, the northeast monsoon will likely bring rains to southern provinces in the second half of December, while heavy rains are expected across Indonesia, according to local meteorological offices.

“Fundamentally, rubber will likely extend rallies,” Varut Rungkhum, an analyst at commodity broker Agro Wealth Ltd., said by phone from Bangkok today. There are “worries over a supply shortage as rains may continue until early next year when the low-production period kicks in,” Varut said.

The Thai cash price advanced 1.7 percent to 146.55 baht ($4.86) per kilo today, according to the Rubber Research Institute of Thailand. The gain was fueled by demand ahead of New Year holidays, while supplies from Thailand, Indonesia and Malaysia are inadequate, the institute said on its website.

Production in Thailand, the biggest grower, may plunge 28 percent in the three months to Dec. 31 from a year ago as a La Nina weather pattern causes unusually heavy rain in the south, the Association of Natural Rubber Producing Countries has said. The southern provinces account for 80 percent of Thai output.

Chinese Demand

Auto sales in China may reach 20 million units next year, according to Booz & Co. and Nomura Holdings Inc. analysts. GM, the biggest foreign automaker in China, expects sales to grow as much as 15 percent, China President Kevin Wale said yesterday. Volkswagen, Europe’s largest carmaker, projects China’s markets will rise 10 to 15 percent, according to Soh Weiming, the company’s local executive president.

Auto demand in China may grow even as the government ends incentives this month that helped boost sales 34 percent to 16.4 million through November. Light-vehicle sales in the U.S. may be as much as 12.8 million units, said Ashvin Chotai, managing director of Intelligence Asia Automotive, a consultant.

Rubber was “also supported by high crude oil prices,” Ker Chung Yang, an analyst at Phillip Futures Pte., said by phone from Singapore. Costlier crude can boost natural-rubber prices as the rival, synthetic product is made from naphtha.

Crude oil traded near the highest level in two weeks on speculation that economic growth in the U.S. will accelerate next year, bolstering demand. Crude for February delivery rose as high as $89.77 a barrel in New York from $88.81 yesterday.

May-delivery rubber in Shanghai gained as much as 1.2 percent to 37,760 yuan ($5,669) a ton before closing at 37,685 yuan. The contract climbed to a record 38,920 yuan on Nov. 11.

Source: Bloomberg