Rubber Futures Reaches Record on Tight Supply, Thai Conflicts

April 16 (Bloomberg) -- Rubber futures for delivery this month climbed to an all-time high as cash prices in Thailand reached a record amid concerns that political turmoil in the largest exporting country may disrupt supplies.

Futures for April delivery in Tokyo gained as much as 7.8 percent to 412.10 yen per kilogram ($4,451 a metric ton) before settling at 411.90 yen. Rubber for September delivery, the most- active contract, rose as much as 1.1 percent to 338.5 yen, the highest level since July 15, 2008. Cash prices in Thailand, the largest exporter, have been rising to records since the start of April as supplies drop during low-production period.

“Thailand’s political crisis has aggravated concerns that supplies will be tighter amid strong demand from China and a recovery in cars in major economies,” said Hiroyuki Kikukawa, general manager of research at Tokyo-based IDO Securities Co.

Weekend clashes between Thai security forces and anti- government protesters were the deadliest in 18 years, killing 23 people and injuring more than 800. The demonstrators remain camped in the capital’s business district demanding the government dissolve the parliament.

April-delivery contract advanced as much as 29.90 yen to 412.10 yen per kilogram, the highest level since the futures began trading in December 1952, Tokyo Commodity Exchange said in a statement today. The previous record was 386.80 yen on Feb. 13, 1980, the exchange said.

The most-active contract has climbed 21 percent this year as global economies recovered from recession, stoking sales of cars and tires. The contract dropped 0.2 percent to settle at 334.2 yen per kilogram, set for the fourth weekly gain.

The free-on-board price of Thai RSS-3 grade rubber for May- delivery climbed to a record 123.30 baht ($3.82) a kilogram on April 12, according to the Rubber Institute of Thailand. The market has been closed since Tuesday for New Year holidays.

Wintering

A rally in local prices has been helped by the low-output period in Thailand, the institute said on April 12. Rubber trees shed their leaves and producers reduce tapping during the season known as wintering.

Rising prices “reflect tightness of the RSS-3 supply from Thailand,” said Felix Yeo, a trading manager at the Singapore unit of Marubeni Corp.

Robust economic growth in China, the biggest consumer of natural rubber, also drives the prices higher as it enhances optimism that demand for the commodity will increase, Yeo said.

China’s gross domestic product grew 11.9 percent in the first quarter from a year earlier, the most since the second quarter of 2007, the statistics bureau said at a briefing in Beijing yesterday. That was more than the median 11.7 percent estimate in a Bloomberg News survey of 24 economists.

China, the largest natural rubber consumer, plans to sell 30,000 tons on April 23, the National Development and Reform Commission said on its Web site today. The sale on April 14 fetched an average 25,020 yuan per ton, the commission said.

“The report dragged the Shanghai prices lower,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said by phone from Bangkok.

September-delivery rubber on the Shanghai Futures Exchange fell 1.6 percent to settle at 25,350 yuan ($3,714) a ton.

Indonesia Rubber Surges to Two-Year High on ‘Huge’ Demand Gain

April 16 (Bloomberg) -- Rubber prices in Indonesia, the world’s second-largest producer, gained to the highest level in at least two years as rains disrupted tapping amid a “huge” surge in demand, a trade group said.

The free-on-board price, or price without freight and insurance, for SIR-20 grade rubber has jumped around 20 percent to $3.35 a kilogram this year, a level not seen since 2008, according to Asril Sutan Amir, chairman of the Rubber Association of Indonesia.

“Two factors that supported the price are low supplies of raw materials from plantations due to rains that cut tapping and also a huge increase in demand, especially from China and India,” Amir said in a telephone interview from Jakarta today. “China is no doubt the shining star for the rubber market, with its economic growth and high vehicles and tires production.”

Indonesian prices have tracked gains in benchmark rubber futures in Tokyo, which have increased more than 21 percent this year on concern that supplies from Thailand and Indonesia won’t keep pace with rising Chinese demand.

Natural rubber exports from Indonesia to China accounted for about 25 percent of the 2 million metric tons the country shipped last year, more than doubling from 12 percent in 2007, Amir said.

“The sentiment from Thailand’s low production and political tension may continue to add support to prices,” Suryadi Mulya, director of CV Dramaga, a Bogor, West Java-based rubber exporter, said by phone.

Thai Records

Futures for April delivery in Tokyo surged as much as 7.6 percent to a record 411.3 yen per kilogram ($4,441 a metric ton) before trading at 397.60 yen at 12:07 p.m. Jakarta time. Rubber for September delivery, the most-active contract, rose as much as 1.1 percent to 338.5 yen, the highest level since July 15, 2008, before trading 0.2 percent lower at 334.2 yen.

Cash prices in Thailand have been rising to records since the start of April as supplies drop during the low-production period known as wintering, when rubber trees shed leaves and latex output drops.

The free-on-board price of Thai RSS-3 grade rubber for May- delivery climbed to a record 123.30 baht ($3.82) a kilogram on April 12, according to the Rubber Institute of Thailand. The market has been closed since April 13 for the country’s New Year holidays.

China Plans to Sell 30,000 Tons of Natural Rubber, NDRC Says

April 16 (Bloomberg) -- China plans to sell 30,000 tons of natural rubber on April 23, the National Development and Reform Commission said on its Web site today.

The nation sold natural rubber at an average price of 25,020 yuan per ton on April 14, according to the statement.