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Rubber Ends Two-Day Advance as Stronger Yen, Weak U.S. Data Reduce Appeal
Rubber, little changed, ended a two- day advance as the Japanese currency strengthened against the dollar and U.S. companies employed fewer workers than forecast in July, undermining confidence in a global economic recovery.
January-delivery rubber in Tokyo gained as much as 0.5 percent to 283.5 yen a kilogram ($3,255 a metric ton) before settling at 282.1 yen. The contract advanced 3.5 percent last week, the biggest increase since the week ended June 25.
The yen traded near an eight-month high against the dollar as signs the U.S. economic recovery is slowing add to speculation the Federal Reserve will take steps tomorrow toward providing more stimulus. A stronger Japanese currency reduces the appeal of yen-denominated contracts.
“Falls across equities markets and poorer-than-expected U.S. data soured market sentiment,” Varut Rungkhum, an analyst at Agro Wealth Ltd., said today by phone from Bangkok.
January-delivery rubber in Shanghai gained 0.9 percent to close at 24,910 yuan ($3,682) a ton.
Private payrolls rose by 71,000 in July, the U.S. Labor Department said Aug. 6. Overall employment fell by 131,000, and the jobless rate held at 9.5 percent.
“A stronger yen cast negative sentiment over the market,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co. “Still, the market downside was cushioned by news that rubber prices continue to hover at a high level.”
Tight Supply
Natural rubber prices are likely to remain near current levels at $3 a kilogram for the next two months because of tight supply and increasing demand, according to the International Rubber Consortium Ltd.
Rubber stockpiles continue to remain low, said Abdul Rasip Latiff, chief executive officer of the Bangkok-based group. “We’ll then see buyers building up inventories,” Rasip said. Global stocks are near 1.4 million tons, below a normal level of around 1.6 million to 1.8 million tons for about eight to 10 weeks of consumption, he said.
“Global production will continue to be below demand until 2012 and that will support prices to move in a range of 250 to 350 yen per kilogram between now and 2011,” Pongsak Kerdvongbundit, managing director of Von Bundit Co., the country’s largest producer, said in a separate interview.
Natural rubber stocks were 20,208 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Aug. 6. Inventories plunged 87 percent from this year’s high of 151,832 tons on Jan. 21, according to data compiled by Bloomberg.
The free-on-board price of the benchmark Thai RSS-3 grade rubber for September-delivery, which excludes freight and insurance, was unchanged today at 104.50 baht ($3.27) a kilogram on Aug. 6, according to the Rubber Institute of Thailand.
To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net
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