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.
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.
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.
To contact the editor responsible for this story: Richard Dobson at Rdobson4@bloomberg.net