Rubber extended a recovery from a two-month low on prospects that a glut of supply will shrink on record car sales and reduced output in India and Malaysia.
The contract for March delivery on the Tokyo Commodity Exchange climbed as much as 1.9 percent to 261.9 yen a kilogram ($2,709 a metric ton) and traded at 261.2 yen at 10:12 a.m. Futures extended gains from a two-month low of 253.8 yen reached Oct. 4, paring losses for this year to 14 percent.
A global surplus will narrow by at least 12 percent to 284,000 tons this year, according to the International Rubber Study Group, a 36-nation body based in Singapore. RCMA Commodities Asia Group cut its estimate for this year’s glut by 33 percent to 351,000 tons on smaller-than-expected output combined with rising demand.
“Rubber fundamentals are improving on reduced output and healthy demand from China and the U.S.,” said Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo.
Futures that fell as much as 62 percent since peaking in 2011 rallied into a bull market in August. Prices in Tokyo will rise to 300 yen by Dec. 31, according to the median of 15 analyst estimates compiled by Bloomberg News.
Natural rubber production in India, the fourth-biggest grower, fell 4.9 percent last month, Rubber Board of India said in an e-mailed statement yesterday. Imports by the nation rose to 179,292 tons between April and September from 112,641 tons a year earlier, it said.
Rubber for January delivery on the Shanghai Futures Exchange rose 1.4 percent to 20,370 yuan ($3,327) a ton. The market resumed trading after a week-long holiday.
Thai rubber free-on-board was unchanged at 78 baht ($2.49) a kilogram yesterday, according to the Rubber Research Institute of Thailand.
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