Rubber Declines From One-Month High as Crude Drops, Yen Weakens

By Aya Takada and Supunnabul Suwannakij

Feb. 23 (Bloomberg) -- Rubber retreated from a one-month high as a drop in oil reduces the competitiveness of the commodity against its rival synthetic products, and a strong Japanese currency weakened the appeal of yen-based contracts.

Futures in Tokyo fell for the third time in four days, losing as much as 2.2 percent. The price reached the highest level since Jan. 21 yesterday, nearing this year’s peak of 306 yen per kilogram ($3,360 a metric ton) on Jan. 15.

Crude oil dropped for the first time in six days on speculation fuel supplies in the U.S. increased, a sign demand from the world’s biggest energy consumer may be slowing. The yen advanced as concern over Greece’s fiscal future and the pace of the Fed’s stimulus withdrawal increased demand for Japan’s currency as a refuge.

“Rubber declined as it lost support from the currency and energy markets,” said Hisaaki Tasaka, an analyst at Tokyo-based commodity broker ACE Koeki Co., said today by phone. Still, “losses were limited as cash rubber prices gained on good demand and tightening supply.”

Rubber for July delivery lost as much as 6.5 yen to 296 yen per kilogram before settling at 299 yen on the Tokyo Commodity Exchange. August-delivery rubber, listed on the bourse today, surged 5.1 percent to settle at 300.8 yen.

In the cash market, shippers in Thailand, the top producer and exporter, raised offers for RSS-3 grade rubber for April shipment to $3.27 a kilogram from $3.20 yesterday, Tasaka said.

Chinese Demand

“Physical prices increased as Chinese buyers returned to the market after the Lunar New Year holiday,” Tasaka said. “Exporters also raised offers on expectations supply will decrease seasonally over the next few months.”

Rubber trees shed leaves and latex output slows during wintering, or the low-production season, that normally begins in Thailand’s main growing areas in February.

May-delivery rubber on the Shanghai Futures Exchange lost 0.6 percent to settle at 24,855 yuan ($3,639) a ton. It rose to 25,380 yuan yesterday, the highest since Jan. 21, as trade resumed after a week-long Lunar New Year holiday.

Benchmark Thai rubber prices continued rising as buyers accelerate purchases before the low-production season, the Rubber Research Institute of Thailand said on its Web site today.

The price of unsmoked sheets gained 0.2 percent to 99.99 baht ($3.02) per kilogram. Ribbed smoked sheets rose 0.8 percent to 104.29 baht a kilogram, according to the organization.

“Strong demand from China and concerns over declining rubber production continue to support Thai prices,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said by phone from Bangkok.

Crude oil for April delivery lost as much as 0.5 percent to $79.73 a barrel in electronic trading on the New York Mercantile Exchange, before trading at $80.09.

The yen strengthened to 90.91 per dollar at 4:35 p.m. in Singapore from 91.14 in New York yesterday, when the currency advanced 0.4 percent.