TOKYO (Jan 12): Benchmark Tokyo rubber futures extended gains to a near 4-year high on Thursday, scaling the key 300-yen/kg mark, as supply concerns over flooding in Thailand prompted buying while a rebound in oil prices lent support, dealers said.
Thailand will lose around 10% of its rubber output in the 2016-2017 crop year after unseasonal flooding affected the country’s main growing region, a senior industry official said on Thursday. Southern Thailand has suffered downpours since Jan 1, resulting in flash floods that have killed 36 people.
The Tokyo Commodity Exchange (TOCOM) rubber contract for June delivery finished 8.1 yen, or 2.8%, higher at 299.0 yen (US$2.62) per kg, after earlier touching 300.9 yen, its highest since March 11, 2013.
“Concerns over Thai rubber production after flooding were behind the rally, although speculative buys gave an extra boost in the TOCOM,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
On the upside, oil prices rose on Thursday, supported by signs OPEC is starting to cut output and expectations of strong demand growth in China, but rising US crude inventories reinforced concerns over plentiful global supplies.
Natural rubber prices in India also jumped to a two-and-a-half-year high on Thursday on limited supplies and tracking gains in overseas markets due to supply disruptions in top producer Thailand, three dealers said.
“But I expect to see some corrections from the recent rally which was also backed by US President-elect Donald Trump’s plan to bolster the US economy,” Kikukawa said, adding TOCOM could fall as low as 230 yen.
The most-active rubber contract on the Shanghai Futures Exchange for May delivery also surged 915 yuan to finish at 20,295 yuan (US$2,942.54) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for February delivery last traded at 214.0 US cents per kg, up 2.8 US cent.
(US$1 = 114.1200 yen)
(US$1 = 6.8971 Chinese yuan)
