Rubber Advances for Second Day as Yen Weakens to Five-Year Low

Dec 27, 2013 2:19 am ET

Dec. 27 (Bloomberg) -- Rubber climbed for a second day as Japan’s currency fell to the lowest level in more than five years, boosting the appeal of yen-denominated futures.

The contract for delivery in June on the Tokyo Commodity Exchange advanced 0.9 percent to settle at 277.3 yen a kilogram ($2,649 a metric ton). Futures capped a 2 percent decline this week and lost 8.3 percent this year.

The yen slid to 105.03 per dollar, the weakest level since October 2008, on speculation the Bank of Japan will continue easing monetary policy as the Federal Reserve pares asset purchases. U.S. jobless claims declined more than economists forecast last week, increasing investor confidence in the recovery of the world’s largest economy.

“Optimism about U.S. economic growth boosted the dollar against the yen, providing support to rubber futures,” said Kazuhiko Saito, an analyst at Fujitomi Co., a broker in Tokyo.

Gains would be limited as speculation grew that rubber stockpiles in China, the world’s largest consumer, may expand further, and put a drag on prices in Shanghai, he said.

Inventory monitored by the Shanghai Futures Exchange rose to 167,141 tons by Dec. 19, nearing a nine-year high, data from the bourse showed. A global surplus may climb to 366,000 tons next year from an estimated 336,000 tons this year, according to The Rubber Economist, a London-based industry adviser.

The contract for May delivery on the Shanghai exchange gained 0.4 percent to close at 18,430 yuan ($3,037) a ton, trimming the weekly loss for most-active futures to 2.2 percent and the annual decline to 30 percent.

Thai rubber free-on-board was unchanged at 83.15 baht ($2.53) a kilogram today, according to the Rubber Research Institute of Thailand.

--Editors: Ovais Subhani, Brett Miller