Tokyo rubber gains on output cut move

Print this page Posted on : 10-30-2008 by recycleinme.com

Natural rubber gained for a second day on speculation major producers may cut production to bolster prices that have fallen to three-year lows and as a rally in stock markets eased concern an economic slump would curb demand. Futures in Tokyo rose as much as 8.2 per cent as officials from Thailand, Indonesia and Malaysia, the world's top producers, met in Bangkok to discuss how to boost prices. Rubber has plunged 51 per cent from a 28-year high of ¥356.9 on June 30.

''There were two key factors in the market'' and the first was market speculation that the producers will cut output and the second was the rise in stock markets, Mr Jun Nishimuta, an analyst at Kanetsu Asset Management Co in Tokyo, said by phone. The yen's weakness also supported prices, he said.

Rubber for April delivery added 5.4 per cent to close at ¥173.9 a kg ($1,784 a tonne) on the Tokyo Commodity Exchange after trading as high as ¥178.5. Prices reached a three-year low of ¥154.6 yen on Tuesday. Rubber has dropped since June on concern the global lending crunch will push the world into recession, reducing demand for commodities. Thailand and Malaysia have proposed felling trees as a way to curb supply, while Indonesia has called on planters to reduce tapping.

''We are focusing on four measures - cutting old rubber trees, stop adding new plantation, delaying tapping and asking exporters to stop quoting prices,'' Mr Somchai Charnnarongkul, Director-general of Thailand's farm ministry's Department of Agriculture, told reporters. January-delivery rubber on the Shanghai Futures Exchange, the most-active contract, closed down 20 yuan at 13,245 yuan ($1,936) a tonne.

Source : Business Line