Rubber Nears Five-Month Low as Drop in Crude Oil Cuts Appeal
May 14 (Bloomberg) -- Rubber tumbled to near a five-month low, extending losses for a fourth week, as a decline in crude oil and losses in equity markets reduced investor demand for the commodity used in tires.
Futures in Tokyo lost as much as 3.3 percent, wiping out the week's gains, after oil dropped for a fourth day and Asian stocks decreased after Portugal announced austerity measures, spurring concern fiscal tightening across Europe will limit economic growth.
"The risk appetite of investors is low as concerns about Europe's debt problems persist," Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone. "The market will remain capped for a while."
Rubber for October delivery, the most-active contract, lost 2.7 percent to settle at 262.2 yen per kilogram on the Tokyo Commodity Exchange. The price fell as low as 255.8 yen on May 12, the lowest level since Dec. 16.
Crude oil for June delivery dropped 0.9 percent to $73.77 a barrel on the New York Mercantile Exchange, cutting the cost of making rival synthetic rubber. The MSCI Asia Pacific Index lost 1 percent to 119.84, trimming the measure's biggest weekly gain in six weeks.
Rubber futures reached a 21-month high of 338.5 yen on April 16 on rising demand and as supply from Thailand, the world's largest exporter, entered a seasonal decline.
Prices have slumped 23 percent since then as growers in Thailand's main producing area resumed tapping, Sugata said. Rubber trees shed leaves and reduce latex output during February to April, a period known as wintering.
Still, cash prices increased as drought has lowered latex output and limited supply, the Rubber Institute of Thailand said on its website today. The price of Thai RSS-3 grade rubber for June-delivery, which excludes freight and insurance, gained 0.2 percent to 112.85 baht ($3.49) a kilogram yesterday, the institute said. It reached a record 130.55 baht on April 28.
September-delivery rubber on the Shanghai Futures Exchange fell 1.6 percent to settle at 21,985 yuan ($3,221) a ton.
--With assistance from Supunnabul Suwannakij in Bangkok. Editor: Matthew Oakley.