Bloomberg News

Rubber Breaches 300-Yen Level as Yen Drops on Stimulus Outlook

December 27, 2012

Rubber rallied above the 300-yen level for the first time since May as Japan’s currency dropped to a 27-month low on prospects for additional stimulus driven by Prime Minister Shinzo Abe’s new government.

Rubber for delivery in June advanced 1.6 percent to 300.7 yen a kilogram ($3,507 a metric ton) on the Tokyo Commodity Exchange, the highest settlement for the most-active contract since May 8. Futures have gained 14 percent this year.

The yen slid to the lowest level against the dollar since September 2010 on expectations that the new government will push for more cash infusions to bolster the economy. A weaker Japanese currency makes yen-denominated contracts cheaper for holders of other currencies, and helps exporters such as Toyota Motor Corp. (7203) boost sales overseas.

The “weakening yen pushed up Tokyo rubber prices,” Gu Jiong, an analyst at commodity broker Yutaka Shoji Co., said by phone. Rubber also advanced on concern that supplies from key exporters will decline after Indonesia, the second-largest grower, forecast lower production next year, he said.

Output in Indonesia may drop 8.9 percent to 2.77 million tons next year as the country limits production and shipments in coordination with other growers, Agriculture Minister Suswono said yesterday. That would be the first fall since 2009.

Toyota Motor Corp., poised to regain its title as the world’s biggest carmaker this year, said yesterday that its vehicle sales may rise 2 percent next year to a record 9.91 million, led by overseas demand.

Rubber for May delivery rose as much as 3.2 percent to 26,135 yuan ($4,190) a ton on the Shanghai Futures Exchange, the highest price since May 11, before closing at 25,940 yuan. China is the world’s largest natural-rubber user.

Thai rubber free-on-board advanced 1 percent to 98.1 baht ($3.20) a kilogram today, according to the Rubber Research Institute of Thailand. The country is the largest exporter.

To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net; Aya Takada in Tokyo at atakada2@bloomberg.net

To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net


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