Tokyo rubber futures jumped 3 percent to a near 3-month high on Tuesday on the back of a Thai rubber-price support plan, while strong oil prices provided an additional boost, dealers said. The benchmark rubber contract on the Tokyo Commodity Exchange for June delivery rose 8.2 yen to settle at 314.2 yen ($4.08) per kg.
It rose as much as 3.04 percent to an intra-day high of 315.3 yen, the level that was close to a 3-month high of 315.8 yen hit on January 20. "The Thai move pushed prices higher. Price could rise much higher than this level if the Chinese come back from a holiday," said a Bangkok-based trader.
Thailand, the world's biggest rubber producer, approved on Tuesday a 15 billion baht ($477 million) budget to buy unsmoked rubber sheet (USS3) from farmers in a bid to prop up prices. The government agreed to buy USS3 at 120 baht ($3.82) a kg, compared with 90 baht at the end of last year. The move comes after the price of benchmark export-grade smoked rubber sheet (RSS3) halved this month from a record high in February 2011. Brent crude held above $110 on Tuesday on supply concerns as some Iranians renewed their threat to block Arab oil from leaving the Gulf, while fears over demand growth stemming from protracted negotiations over Greece's debt capped any gains.