The contract for delivery in June on the Tokyo Commodity Exchange lost 1 percent to end at 274.5 yen a kilogram ($2,605 a metric ton). Futures gained 1.6 percent this month, while dropping 9.3 percent during volatile trading in 2013 that saw the raw material slump into a bear market in April and bounce back into a bull market in August. Japan’s markets will be closed from tomorrow for holidays and reopen Jan. 6.
Inventory monitored by the Shanghai Futures Exchange rose to 174,498 tons by Dec. 26, the highest level since 2004, data from the bourse showed. Crude rubber stockpiles held at Japanese warehouses climbed 3.6 percent to 11,965 tons on Dec. 20, the highest level since June, according to data from the Rubber Trade Association of Japan.
“Investors are adjusting positions ahead of New Year holidays amid concerns that high stock levels in China and Japan will weaken demand,” said Ryuta Imazeki, an analyst at Tokyo-based Okachi & Co. “The downside is limited by the weak yen and rising oil prices.”
The yen retreated to 105.41, the lowest level in more than five years, amid speculation a sustained U.S. economic recovery will allow the Federal Reserve to cease bond purchases by the end of 2014. A lower Japanese currency makes yen-based contracts more attractive to investors. Crude oil in New York traded above $100 a barrel for a second day.
Global demand may expand 3.1 percent to 11.6 million tons next year, less than the 4.1 percent growth estimated in September, according to the Rubber Economist Ltd. A surplus may climb to 366,000 tons in 2014, the industry adviser said.
Futures for May delivery on the Shanghai exchange fell 0.9 percent to close at 18,265 yuan ($3,013) a ton, extending an annual decline to 31 percent. Rubber free-on-board in Thailand was unchanged at 83.15 baht ($2.52) a kilogram on Dec. 27, according to the Rubber Research Institute of Thailand. Prices have dropped 16 percent this year. The Thai market was closed today for a holiday.
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