Rubber neared a bull market a month after slumping into bear territory as Japan’s currency weakened to a four-year low against the dollar and China, the biggest consumer, expanded imports for restocking.
Rubber for delivery in October climbed 6.1 percent to 293.6 yen a kilogram (2,905 a metric ton) on the Tokyo Commodity Exchange, a 19.7 percent gain from this year’s lowest settlement for a most-active contract of 245.2 yen reached April 18. The commodity fell into a bear market on April 1.
Japan’s currency breached 100 per dollar for the first time in four years, making yen-based futures more attractive to investors. China imported 35 percent more rubber in April from a year earlier, and 32 percent more in the first four months of 2013. Expanded purchases from the country boosted cash prices in Thailand, the biggest producer, to a two-month high.
“Futures had been oversold because of concerns about recession in Europe and slowdown in China’s economic growth,” Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo, said by phone. “China is actually expanding rubber imports to build up stockpiles, buoying cash prices, while futures in Tokyo got an extra boost from the currency market.”
The yen has depreciated 21 percent in the past six months, the most among 16 major currencies tracked by Bloomberg. The currency weakened after data from the Labor Department showed U.S. applications for unemployment insurance payments decreased by 4,000 to 323,000 in the week ended May 4, the least since January 2008.
The Bank of Japan increased monthly bond purchases on April 4 to exceed 7 trillion yen at Governor Haruhiko Kuroda’s first policy meeting in charge, exceeding the 5.2 trillion yen forecast by economists in a Bloomberg News survey, as the bank aims to achieve a 2 percent inflation target in two years.
Policy makers maintained the unprecedented plan at an April 26 meeting and predicted inflation will almost match their target in two years even after a report highlighted deflation’s grip. Kuroda said the central bank will keep its stimulus until stable 2 percent gains in consumer prices are realized.
China was reported by the official Securities Journal last year to plan to stockpile as much as 200,000 tons of rubber through 2013, including the purchase of 60,000 tons by the end of 2012, at 24,600 yuan ($4,006) a ton.
The amount is almost double the volume China bought for reserves previously. The State Reserve Bureau, a Beijing-based agency in charge of stockpiling strategic commodities, bought 105,000 tons during the financial crisis in 2009. The contract for September delivery on the Shanghai Futures Exchange climbed 2.7 percent to 20,875 yuan a ton.
“Rising imports by China help boost cash rubber prices,” Hideshi Matsunaga, an analyst at broker ACE Koeki Co. in Tokyo, said by phone. “Futures in Tokyo will correct higher as the market is still undervalued compared with cash prices.”
Thai rubber free-on-board rose 0.2 percent to 89.30 baht ($3.03) a kilogram yesterday, the highest level since March 12, according to the Rubber Research Institute of Thailand. It was a 13 percent rebound from this year’s low of 79 baht reached on April 19. The nation extended curbs on exports by 60 days to the end of May to boost prices, Deputy Farm Minister Yuttapong Charasathien said April 1.
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