Feb. 20 (Bloomberg) -- Rubber futures tumbled to the lowest level in more than a month on speculation that shipments from Thailand, the world’s largest producer, may increase as the nation is expected to end a price-support program as planned.
The contract for July delivery fell 3 percent to 305.3 yen a kilogram ($3,273 a metric ton) on the Tokyo Commodity Exchange, the lowest settlement price for the most-active contract since Jan. 16. The drop widened losses this month to 3.3 percent and cut gains to 0.9 percent this year.
The Thai government will review a program to support prices by purchasing the commodity from farmers when it expires at the end of March, Deputy Farm Minister Yuttapong Charasathien said yesterday. Thailand agreed with Indonesia and Malaysia last year to cut exports by a combined 300,000 tons in the six months through March to bolster prices.
“Funds may sell their positions to cut losses because their average cost is around 315 to 320 yen,” Gu Jiong, an analyst at commodity broker Yutaka Shoji Co., said by phone from Tokyo. This intensified losses, amid speculation the Thai government will end the price-support measure, he added.
Futures in Tokyo have gained 17 percent since Oct. 1, when the three largest producers began restricting shipments. The price recovered on signs of global economic recovery and Japanese Prime Minister Shinzo Abe’s stimulus that weakened the yen to an almost three-year low against the dollar.
The contract for September delivery in Shanghai fell 1.1 percent to close at 25,805 yuan ($4,135) a ton. Thai rubber free-on-board declined for a second day, falling 1.8 percent to 94.70 baht ($3.17) a kilogram today, according to the Rubber Research Institute of Thailand.
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