Rubber Retreats on Stronger Yen Amid Concern Supply May Increase

Rubber futures declined in Tokyo after the Japanese currency strengthened and on concern that supply will increase from Thailand, the world’s largest exporter.

The contract for delivery in November fell as much as 2.7 percent to 254.4 yen a kilogram ($2,556 a metric ton) on the Tokyo Commodity Exchange before trading at 255.9 yen at 2:52 p.m. Futures have lost 15 percent this year.

The yen climbed as much as 0.6 percent to 99.39 per dollar after Japanese Prime Minister Shinzo Abe’s growth strategy failed to boost domestic stocks. The wintering season is over in northern Indonesia, Malaysia and Thailand, allowing farmers to resume tapping and increase latex production, according to the International Rubber Consortium Ltd.

“Market sentiment remains bearish as demand is still weak amid concerns over the slowing global economy and the strengthening yen,” Sureerat Kunthongjun, an analyst at Agrow Enterprise Ltd., said by phone from Bangkok.

Rubber production in Indonesia, the second-biggest producer, may rise five percent to 3.18 million tons this year, according to Association of Natural Rubber Producing Countries. Output in Malaysia, the third-largest producer, may gain 6.2 percent to 980,000 tons, the group said in a report yesterday.

“I’m watching to see if Thailand will take additional steps to bolster prices,” Hideshi Matsunaga, an analyst at broker ACE Koeki Co. in Tokyo, said by phone today.

Thai rubber free-on-board dropped 0.3 percent to 88.15 baht ($2.89) a kilogram today, the lowest level in a month, according to the Rubber Research Institute of Thailand. Rubber for delivery in September on the Shanghai Futures Exchange fell 1.7 percent to 18,825 yuan ($3,072) a ton.

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