SHANGHAI: Japanese rubber futures closed higher on Wednesday, climbing to a 10-month high on concerns of wet weather disrupting production in top producer Thailand.
The Osaka Exchange (OSE) rubber contract for June delivery rose 4.5 yen, or 1.29 percent, to 353.7 yen (USD2.26) per kg. The contract climbed to 355 yen earlier in the session, its highest point since late March.
The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 230 yuan, or 1.44 percent, to 16,180 yuan (USD2,315.70) per metric ton, its highest since early September. The most-active February butadiene rubber contract on the SHFE rose 295 yuan, or 2.49 percent, to 12,155 yuan per ton.
Thailand’s meteorological agency warned of isolated and heavy thunderstorms from January 6–9 in the south, a key rubber-producing region, putting upward pressure on prices.
Rains, however, are expected to ease from January 10–11, improving supply prospects and putting downward pressure on prices. Factory restocking in China ahead of the Lunar New Year in February is likely to provide additional support for prices, according to financial news site cngold.
However, weakness in crude oil prices weighed on rubber prices. Oil prices extended their decline, falling more than 1percent after US President Donald Trump said Venezuela would be “turning over” 30 million to 50 million barrels of sanctioned oil to the United States. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.