Rubber Jumps Most in Five Weeks as Global Glut Seen Shrinking

Rubber posted the biggest gain in five weeks in Tokyo on prospects that an oversupply will shrink on record car sales and reduced output in India and Malaysia.

The contract for March delivery on the Tokyo Commodity Exchange climbed 2.8 percent to settle at 264.2 yen a kilogram ($2,718 a metric ton), the most since Sept. 2. The rally pared losses for this year to 13 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.

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 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 added 2.5 percent to close at 20,585 yuan ($3,364) a ton. The market resumed trading after a week-long holiday.

Thai rubber free-on-board gained 1.9 percent to 79.5 baht ($2.54) a kilogram today, according to the Rubber Research Institute of Thailand.

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