BLBG: Rubber Retreats From Five-Week High as Yen’s Rally Cuts Appeal
By Aya Takada
Feb. 25 (Bloomberg) -- Rubber declined from a five-week high as a rally in the Japanese currency made yen-based contracts less attractive to investors.
Futures in Tokyo fell as much as 1.6 percent after reaching 303.4 yen per kilogram ($3,380 a metric ton) yesterday, the highest level since Jan. 20. It was the second decline this week.
Japan’s currency advanced for a fifth day on speculation Greece’s credit rating will be downgraded as the nation struggles with pushing through fiscal cuts demanded by the European Union. The yen is trading near its highest against the dollar since Feb. 10.
“A higher yen was the largest drag on the price of rubber,” Kazuhiko Saito, chief analyst at Tokyo-based broker Fujitomi Co., said today by phone. “There were no aggressive sellers as rubber looks fundamentally strong on demand recovery and seasonally tight supplies.”
Rubber for August delivery, the most-active contract, lost as much as 4.7 yen to 296.8 yen and traded at 297.6 yen on the Tokyo Commodity Exchange at 12:20 p.m. local time.
The yen advanced after Standard & Poor’s said it may cut Greece’s rating again by the end of March as a weak economy and political opposition threaten the nation’s ability to reduce the EU’s largest budget deficit. The dollar also climbed against the euro, reducing the appeal of commodities as alternative assets.
Low Production
Losses in rubber futures were limited after physical prices increased, Fujitomi’s Saito said. Thailand, the largest producer and exporter, is entering the low production season, reducing the raw material supply, he said.
Rubber trees shed leaves and latex output slows during the season, known as wintering, that normally begins in the nation’s main growing areas in February.
Thai shippers offered so-called RSS-3 grade rubber for April shipment at $3.25 a kilogram, according to the Web site of Rubber Research Institute of Thailand. The price increased from $3.20 on Feb. 22, according to Hisaaki Tasaka, an analyst at Tokyo-based commodity broker ACE Koeki Co.
May-delivery rubber on the Shanghai Futures Exchange fell 1 percent to 24,895 yuan ($3,646) a ton at 11:20 a.m. local time. It earlier rose to 25,450 yuan, the highest level since Jan. 21.
To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net;
