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Rubber Drops to Lowest in Three Months on Malaysian Exports, Yen

March 14 (Bloomberg) -- Rubber declined for a third day to the lowest level in three months after exports surged from Malaysia, the third-largest producer, and the Japanese currency strengthened, reducing the appeal of yen-based contracts.

The contract for delivery in August on the Tokyo Commodity Exchange fell 1.1 percent to end at 277.6 yen a kilogram ($2,880 a metric ton), the lowest settlement since Dec. 14. Futures have lost 8.7 percent in the past three days.

Rubber exports from Malaysia jumped 21 percent to 68,300 tons in January from a year earlier, while production gained 3.3 percent to 87,960 tons, according to the statistics department. Inventory surged 23 percent to 188,100 tons, it said. The yen traded at 95.75 from 96.13 yesterday. The lower house of Japan’s parliament will vote today on central bank leadership nominees.

“Production is greater than demand, raising inventories,” said Gu Jiong, an analyst at commodity broker Yutaka Shoji Co. “This puts pressure on the rubber market.”

Inventories in China, the largest user, jumped to 107,481 tons, the highest level in three years, based on a survey of nine warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said March 8. Stockpiles in Japanese warehouses rose 3.8 percent to 11,363 tons on Feb. 28, the Rubber Trade Association of Japan said March 11.

Strengthening Japanese currency also cut an appeal of the yen-denominated currency, while a slowdown in China car sales raised concerns demand may weaken, Chaiwat Muenmee, an analyst at DS Futures Co., said by phone from Bangkok.

The yen gained versus most major peers as an adviser to Japanese Prime Minister Shinzo Abe signaled a need to control inflation and as technical indicators suggested the currency’s decline has been too rapid.

China’s passenger car sales in February dropped 8.3 percent on year to 1.11 million units, the China Association of Automobile Manufacturers said March 11. Truck sales tumbled 28 percent on year to 177,400 unit, the group said.

The contract for September delivery declined 0.2 percent to close at 22,785 yuan ($3,665) a ton in Shanghai. Thai rubber free-on-board lost 2.3 percent to 86.30 baht ($2.91) a kilogram today, according to the Rubber Research Institute of Thailand.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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