SINGAPORE: Japanese rubber futures rose to their highest in 2-1/2 weeks on Wednesday as a stronger Nikkei bolstered investor sentiment, while wet weather in production areas triggered supply concerns.
The Osaka Exchange (OSE) rubber contract for November delivery ended daytime trade 8 yen higher, or 2.69%, at 305 yen ($2.11) per kg. Earlier in the session, the contract reached 305.6 yen, its highest since May 30.
The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery rose 155 yuan, or 1.12%, to 14,010 yuan ($1,949.73) per metric ton. The most active July butadiene rubber contract on the SHFE strengthened 275 yuan, or 2.4%, to 11,740 yuan ($1,633.82) per metric ton. Japan’s Nikkei share average hit a four-month high on Wednesday on a weaker yen.
The yen touched a one-week low of 145.445 per US dollar in early trading. A weaker currency makes yen-denominated assets more affordable to overseas buyers. Rain has interfered with rubber tapping in both domestic and overseas production areas, and the overall output of raw materials is in short supply, said Chinese commodities data provider Longzhong Information. Top rubber producer Thailand’s meteorological agency warned of heavy rains that could cause flash floods and overflows from June 20-23, adding that farmers should be wary of crop damage.
Meanwhile, Japan’s exports fell for the first time in eight months in May, as big automakers were hit by sweeping US tariffs. Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres.
The front-month rubber contract on Singapore Exchange’s SICOM platform for July delivery last traded at 165 US cents per kg, up 1.2%.
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