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Wednesday, August 17, 2022

Rubber Drops to Two-Month Low on Renewed Concerns About Europe

Rubber dropped to a two-month low after Japan’s currency strengthened by the most in almost three years yesterday, cutting the appeal of yen-based contracts, on concern Italy’s elections will lead to renewed turmoil in Europe.

The contract for August delivery on the Tokyo Commodity Exchange fell as much as 2.9 percent to 289.7 yen a kilogram ($3,134 a metric ton), the lowest level for a most-active contract since Dec. 25. Futures traded at 292 yen at 11:02 a.m., extending this year’s losses to 3.5 percent.

The yen traded at 92.55 per dollar after surging 1.7 percent to 91.82 yesterday, the biggest gain since May 2010. Italy may require another vote after partial election results suggested the four-way race may end in a divided parliament, an aide to Democratic Party candidate Pier Luigi Bersani said.

“Investor appetite for futures weakened as the European turmoil boosted the yen as a haven,”Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said by phone today.

Rubber also declined on concerns demand from China, the biggest consumer, may slow, Saito said. China may tighten monetary policy because of excessive liquidity in the market and rising property prices, China Securities Journal reported today.

The contract for September delivery on the Shanghai Futures Exchange lost 0.4 percent to 24,555 yuan ($3,941) a ton. Thai rubber free-on-board declined 0.6 percent to 91.20 baht ($3.05) a kilogram on Feb. 22, according to the Rubber Research Institute of Thailand. The Thai market was closed yesterday for a holiday.

Source: Bloomberg

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