Rubber Advances as Yen Declines, Thai Exporters Boost Offers

Rubber Advances as Yen Declines, Thai Exporters Boost Offers
Dec. 1 (Bloomberg) -- Rubber advanced as a drop in Japan’s currency against the dollar raised the appeal of yen-based contracts and as shippers in Thailand increased prices after rain and flooding curbed production.
Futures in Tokyo gained as much as 1.5 percent as the yen fell the most in seven weeks against the dollar after the Bank of Japan announced an emergency policy meeting today, spurring speculation it will seek to limit the currency’s gains. Thai exporters boosted prices of so-called RSS-3 grade rubber for January shipment to $2.70 a kilogram today from $2.64 as of Nov. 27, said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo.
“Supply of raw material remains tight after rain and flooding disrupted tapping in the southern part of Thailand,” Shigemoto said by phone. Futures also drew support from the currency market, he added.
Rubber for May delivery, the most-active contract, added 0.9 percent to settle at 249.3 yen per kilogram ($2,873 a metric ton) on the Tokyo Commodity Exchange.
The contract advanced 2.4 percent yesterday, the largest daily gain since Nov. 19, amid speculation the impact on global markets from Dubai World’s request to delay debt payments will be limited. The company said it began “constructive” talks with banks to restructure $26 billion of debt.
Yen Weakens
Japan’s currency, which reached a 14-year high last week against the dollar, weakened versus all 16 major counterparts after Kyodo News reported the central bank will consider monetary easing steps amid pressure to halt falling consumer prices. The yen lost 1.3 percent to 87.53 per dollar before trading at 86.97 as of 3:39 p.m. Tokyo time.
The government has stepped up calls on the Bank of Japan to prop up growth since declaring the economy was in deflation on Nov. 20. BOJ Governor Masaaki Shirakawa pledged yesterday to act promptly and decisively.
Rubber futures reached the highest level in 14 months Nov. 26 amid concern supply from Thailand will drop. Rubber plantations in the four Thai 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.
Rubber for March delivery on the Shanghai Futures Exchange fell 0.1 percent to close at 21,725 yuan ($3,182) a ton.