Rubber Climbs to 14-Month High as Floods Curb Thai Production

Rubber Climbs to 14-Month High as Floods Curb Thai Production
Nov. 24 (Bloomberg) -- Rubber rallied to the highest level in almost 14 months on concern that flooding in Thailand, the world’s largest producer, will reduce supply.
Futures on the Tokyo Commodity Exchange gained as much as 2.7 percent to 250 yen a kilogram ($2,804 a metric ton), the highest level since Oct. 2, 2008. Flooding hit four provinces in southern Thailand after heavy rain started falling in the region on Nov. 19, the Royal Irrigation Department said yesterday on its Web site.
“Lower supply from Thailand due to floods in southern provinces is a bullish factor driving the prices higher,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said by phone from Bangkok.
April-delivery rubber rallied 2.4 percent to 249.2 yen a kilogram on the Tokyo Commodity Exchange at 12.24 p.m. Tokyo time. The bourse was closed yesterday for a holiday in Japan.
Rubber plantations in the four provinces affected by flooding accounted for about 20 percent of the country’s total plantation area of about 2.7 million hectares (6.7 million acres), according to the Rubber Research Institute of Thailand.
Output from Thailand may decline “about 10 percent” this year to between 2.7 million and 2.8 million tons as heavy rain disrupts production, Prapas Euanontat, the Thai Rubber Association’s secretary-general, said Nov. 16. The nation produced 3.1 million tons in 2008.
Rubber, used to make tires, also advanced after gold touched an all-time high of $1,174 an ounce yesterday as the dollar fell as much as 0.9 percent against the euro, boosting demand for commodities as alternative assets.
March-delivery rubber on the Shanghai Futures Exchange gained 0.3 percent to 21,900 yuan ($3,207) a ton at the 11.30 a.m. local time break.
Natural rubber stockpiles monitored by the bourse rose 4,130 tons to 133,997 tons, the exchange said on Nov. 20, the highest level since November 2004.