Oct. 31 (Bloomberg) -- Rubber declined for the first time in four days as speculation the Federal Reserve may cut stimulus sooner than previously expected weighed on investor sentiment.
The contract for delivery in April, the most active by volume on the Tokyo Commodity Exchange, lost 1 percent to settle at 261.6 yen a kilogram ($2,660 a metric ton). Futures fell 1.5 percent this month, extending losses to 14 percent this year.
The Fed maintained its $85 billion in monthly bond purchases yesterday, saying it needs to see more evidence that the economy is improving while noting signs of “underlying strength.” The odds of the U.S. starting to taper in January rose to 45 percent, from 25 percent before the Fed statement, according to Citigroup Inc.
“Speculation on Fed tapering was negative for rubber,” said Megumi Saito, a trader at commodity broker Yutaka Shoji Co. in Tokyo. “An increase in stockpiles also puts pressure on prices.”
Crude rubber stockpiles held at Japanese warehouses rose 21 percent to 5,314 tons on Oct. 20, according to data from the Rubber Trade Association of Japan.
The market will remain in a surplus this year and next year, though below 250,000 tons, Macquarie Group said in a report dated Oct. 29. Consumption will grow 2.8 percent this year and 3.4 percent in 2014, the bank said.
Rubber for May delivery on the Shanghai Futures Exchange fell 1.7 percent to close at 19,725 yuan ($3,237) a ton. Thai rubber free-on-board dropped 0.3 percent to 78.10 baht ($2.51) a kilogram today, according to the Rubber Research Institute of Thailand.
--Editors: Sungwoo Park, Jarrett Banks