BS: Rubber, Set for Fifth Monthly Gain, Pares Gains on China Rates
By Supunnabul Suwannakij
Nov. 30 (Bloomberg) -- Rubber, set for a fifth monthly advance, pared earlier gains as speculation that China will raise interest rates overshadowed worries over limited supply from Thailand, the biggest producer and exporter.
May-delivery rubber on the Tokyo Commodity Exchange rose as much as 2.6 percent to 366.4 yen per kilogram ($4,353 a metric ton) before trading at 357.8 yen at 1:56 p.m. local time. The most-active contract, which reached a 30-year high of 383 yen on Nov. 11, has surged about 9.5 percent this month, the biggest advance since December.
“Worries over the spread of the European debt crisis and China interest-rate hike speculation are clouding market sentiment, sparking a fall in Shanghai rubber, which spills over to Tocom,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co. said by phone from Bangkok.
Futures in Shanghai fell as much as 3.7 percent to 29,510 yuan ($4,425) a metric ton before pausing at 29,605 yuan at midday break. The contract is set for the first monthly decline in five.
European governments’ 85 billion-euro ($111 billion) bailout package for Ireland failed to quell the market turmoil, menacing the euro as stocks, bonds and the currency declined.
China’s recent increases in the reserve requirement ratio for banks won’t be enough to reverse excessive liquidity in the system, Zhong Jiyin, an economist with the Chinese Academy of Social Sciences, wrote in a commentary in the China Daily today. China needs to raise interest rates by another 200 basis points, or 2 percentage points, to curb inflation given existing excess liquidity, Zhong wrote.
Wet weather in southern Thailand continues to curb supply, according to the Rubber Research Institute of Thailand. The south of the country accounts for about 80 percent of output.
Supply from the Association of Natural Rubber Producing Countries, which represents about 92 percent of global production, may drop 3.8 percent in the three months to Dec. 31 as rains have disrupted tapping in Thailand, the group said on Nov. 25.
Output from Thailand is estimated to tumble by 28 percent during the October-to-December period, which will lower this year’s production by 1.4 percent to 3.12 million tons, the producers’ group said.
The cash price of natural rubber in Thailand was unchanged at 131.55 baht ($4.35) per kilogram today. Auctioned prices of ribbed smoked sheets rose 0.4 percent to 123.45 baht, boosted by a weakening yen and a supply shortage, the Rubber Research Institute of Thailand said today on its website.
Stronger Dollar
The dollar is poised for its first monthly gain against the yen since April on speculation that the U.S. economic recovery is picking up and as tension on the Korean peninsula intensifies.
The dollar was close to a two-month high against the yen before a U.S. report economists said will show consumer confidence rose for a second month. The dollar bought 84.18 yen after strengthening yesterday to 84.41 yen, the highest level since Sept. 27.
The Conference Board’s confidence index climbed to 53 this month from 50.2 in October, according to a Bloomberg News survey of economists before today’s report. Confidence among U.S. consumers increased more than forecast in November to the highest level in five months, a report showed last week.
“I don’t see any fundamental reasons to sell rubber as demand is supported by car sales in China,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd., said by phone from Tokyo. “Lower prices also attracted buyers,” he said.
China’s wholesale deliveries of cars, sport-utility vehicles and multipurpose vehicles increased 27 percent from a year earlier to 1.2 million last month, the China Association of Automobile Manufacturers said Nov. 9.
--With reporting by Yasumasa Song in Tokyo. Editor: Matthew Oakley.
To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net; Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
