Rubber advanced for a third day as the Japanese currency declined to a three-month low against the dollar, raising the appeal of yen-denominated contracts, and on speculation that demand from tiremakers may increase.
The July-delivery contract gained as much as 2 percent to 323.3 yen a kilogram ($4,115 a metric ton) on the Tokyo Commodity Exchange at 10:48 a.m., reaching the highest level since Feb. 9.
The yen dropped to 78.66 per dollar, the lowest level since Nov. 1, extending losses after Japan’s central bank unexpectedly added 10 trillion yen to an asset-purchase program and set an inflation goal of 1 percent yesterday. Japanese stocks rallied, sending the Nikkei 225 Stock Average toward a six-month high, as a falling yen boosted the earnings outlook for exporters including carmakers and tire producers.
“The yen’s drop gave the biggest boost to futures,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone.
Rubber was also supported by a seasonal decrease in supply as Thailand, the world’s largest producer and exporter, entered a low-production period this month, he said.
Supply in major producing countries remains tight as trees are shedding leaves during the dry wintering season, while demand from the automotive industry remains steady, according to the International Rubber Consortium Ltd.
Gains were capped by concerns about the debt crisis as European finance ministers canceled a Brussels meeting slated for today. They will hold a teleconference instead to prod Greece to do more to clinch an aid package worth 130 billion euros ($170 billion) along with about 100 billion euros of debt relief from private bondholders. Greece needs the aid to make a 14.5 billion-euro bond payment on March 20.
May-delivery rubber in Shanghai rose 1.6 percent to 28,695 yuan ($4,554) a ton. The Thai cash price dropped 0.4 percent to 124.55 baht ($4.03) a kilogram yesterday, according to the Rubber Research Institute of Thailand.
To contact the reporter on this story: Aya Takada in Tokyo at email@example.com