SINGAPORE: Japanese rubber futures rallied for a fifth session on Monday, touching a more than two-month high, as supply concerns amid continued wet weather in top producer Thailand supported prices.
The Osaka Exchange (OSE) rubber contract for January delivery closed up 4.9 yen, or 1.37%, at 353.9 yen ($2.46) per kg. The January rubber contract on the Shanghai Futures Exchange (SHFE) rose 130 yuan, or 0.8%, to finish at 16,440 yuan ($2,308.83) per metric ton.
Rubber prices were supported in part due to weather-related elements impacting trade flows this month, with reports of wet weather, especially in Northern Thailand, impacting some raw material, said Farah Miller, CEO of independent rubber-focused data firm Helixtap Technologies.
“At current prices, market participants could be wondering if this has been priced in and some technical correction could be expected in the coming weeks,” Miller added.
Thailand’s meteorological agency warned of heavy rains that may cause flash flood from Aug. 27-30. With demand from Europe and the US already starting to rebound, and Chinese demand gathering pace, strong fundamentals are expected to offset the negative influence of a stronger Japanese yen on rubber futures, said Jom Jacob, chief analyst at Indian analysis firm What Next Rubber.
The dollar sank to a three-week trough against the yen, as Federal Reserve Chair Jerome Powell’s emphatic dovish shift contrasted sharply with Bank of Japan chief Kazuo Ueda’s steadfastly hawkish tone.
The dollar slumped as much 0.66% to 143.45 yen for the first time since Aug. 5, before trading down 0.31% as of 0517 GMT. A stronger currency makes yen-denominated assets less affordable to overseas buyers.
The front-month September rubber contract on Singapore Exchange’s SICOM platform last traded at 179.7 US cents per kg, up 1.4%.
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