TOKYO (Dec 2): Benchmark Tokyo rubber futures rose to a six-week high on Wednesday as gains in Shanghai rubber futures and Chinese stock markets prompted investors to unwind short positions, with some dealers suggesting the long bearish trend is finally turning around.
Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, had fallen nearly 40% by early November since they hit this year’s highs in early June.
The TOCOM rubber contract for May delivery <0#2JRU:> finished 4.2 yen, or 2.6%, higher at 168.3 yen (US$1.37) per kg. It earlier climbed to as high as 168.7 yen, the highest since Oct 23.
“Higher stock market and rubber futures in Shanghai gave a boost to the TOCOM prices,” said Hiroyuki Kikukawa, general manager at Nihon Unicom Inc.
China stocks posted their biggest one-day percentage rise in a month on Wednesday, as investors rotated out of small caps into blue chips, with property shares surging for the second day on speculation of more government stimulus.
The most-active rubber contract on the Shanghai Futures Exchange for May delivery rose 270 yuan to finish at 10,385 yuan (US$1,622.99) per tonne.
“Traditionally, the rubber market shows the strongest performance in December as it gets closer to low output season that starts early part of the year,” Kikukawa said.
Rubber is tapped year round but latex output drops during the dry wintering season when trees shed leaves. Wintering in Thailand and Malaysia lasts from February to April.
“Also, dealers tend to become more active ahead of the year-end to make additional profits,” he said, predicting that the market may head toward 180 yen this month.
The front-month rubber contract on Singapore’s SICOM exchange for January delivery last traded at 117.5 US cents per kg, up 1.0 US cent.
(US$1 = 123.1600 yen)
(US$1 = 6.3987 Chinese yuan)
