Japanese rubber futures rise for third day on weaker yen, supply outlook

SINGAPORE: Japanese rubber futures climbed for a third consecutive session on Tuesday, supported by a weaker yen, while worsening weather in leading producer Thailand raised concerns over supply.

The Osaka Exchange (OSE) August rubber contract ended daytime trade 4.4 yen higher, or 1.25%, at 355.4 yen ($2.36) per kg.

Earlier in the session, prices touched 358.5 yen, their highest point since March 5. The May rubber contract on the Shanghai Futures Exchange (SHFE) rose 75 yuan, or 0.44%, to 17,095 yuan ($2,354.52) per metric ton. The most active May butadiene rubber contract on the SHFE edged down 30 yuan, or 0.22%, to 13,560 yuan ($1,867.64) per ton.

The dollar was last up at 150.56 yen on Tuesday, rising to a three-week high during the Asian trade. A weaker currency makes yen-denominated assets more affordable to overseas buyers.

Thailand’s meteorological agency warned of potential crop damage, with outbreaks of summer storms possible from March 29-31. Still, as production enters the second quarter, overseas rubber-producing countries will usher in a new round of harvesting, said broker Baocheng Futures.

Rubber crops usually undergo a season of low production from February to May, before a peak harvesting period that lasts until September. US President Donald Trump said on Monday that automobile tariffs are coming soon, though not all of his threatened levies would be imposed on April 2.

Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres. As prices rebound, market participants may opt to see if this trend continues or acts as a resistance level, said Farah Miller, founder of independent rubber-focused data firm Helixtap Technologies.

The front-month rubber contract on Singapore Exchange’s SICOM platform for April delivery last traded at 198 US cents per kg, down 0.4%.