By Aya Takada
March 25 (Bloomberg) -- Rubber surged after an Indonesian producers’ group warned that output may decline this year and a weakening of the Japanese currency raised the appeal of yen- based contracts for the commodity used to make tires.
Futures in Tokyo gained as much as 3.4 percent, matching the high set on March 9. The price peaked this year at 306 yen per kilogram ($3,332 a metric ton) on Jan. 15 on optimism that the global economic recovery will boost demand.
Output from Indonesia, the second-largest producer, may drop to 2 million tons this year from 2.4 million in 2009, the Rubber Association of Indonesia said. The yen fell to a two- month low against the dollar yesterday on speculation the European Union will fail to agree to measures to help Greece tackle its fiscal deficit at a meeting starting today.
“Futures gained because of a weaker yen and declining supply from Asian producers,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone.
Rubber for August delivery gained as much as 9.9 yen to 297.9 yen per kilogram on the Tokyo Commodity Exchange before settling at 297.6 yen.
Output from Indonesia may slump this year if unfavorable weather persists into the second half after rains disrupted first-quarter tapping, Asril Sutan Amir, chairman of the Rubber Association of Indonesia, said in an interview late yesterday.
Malaysian Output
Production last year in Malaysia shrank 20 percent to 860,000 tons as heavy rainfall hurt tapping, Bank Negara Malaysia said yesterday in a report, confirming earlier data.
Malaysian output this year may rebound 17 percent to 1 million tons, Minister for Plantation Industries and Commodities Bernard Dompok said in an e-mail earlier this month.
In the cash market, shippers in Thailand, the world’s largest producer and exporter, offered RSS-3 grade rubber for May shipment at $3.30 a kilogram today, unchanged from yesterday, Shigemoto said. The price increased from $3.27 on March 15 as output declined amid the low production season, he added.
During that period, known as wintering, rubber trees shed their leaves and latex production slows. In Thailand, the season lasts from February to April.
Rubber for September delivery advanced 2.4 percent to settle at 24,230 yuan ($3,549) a ton on the Shanghai Futures Exchange. Earlier, the price gained to 24,780 yuan, the highest level since March 8.
The Japanese currency was at 91.85 per dollar at 4:29 p.m. in Tokyo after falling to 92.40 yesterday, the weakest level since Jan. 12.
(businessweek.com)
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