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 Rubber Prices in Indonesia Advance to Record on Rainfall, Association Says

Rubber in Indonesia, the world s second-largest producer, surged to a record after heavy rains disrupted tapping and the price may extend gains, according to an industry association.

The free-on-board price, or cost without freight and insurance, for SIR-20 grade climbed today to $3.85 a kilogram, Asril Sutan Amir, chairman of the Rubber Association of Indonesia, said by phone. The price was quoted at $3.67 yesterday, and was about $2.87 at the start of the year, according to data compiled by International Rubber Consortium.

A La Nina weather event has brought heavier-than-usual rainfall to parts of Australia and Asia this year, including Thailand, Indonesia and Malaysia, the three biggest rubber growers. The rains have also been blamed by Indonesian industry groups for lower output or missed forecasts for cocoa and tin.

The Indonesian rubber price may advance to $4 by the end of this month because there s a “supply shortage” and growing demand, said Amir. Output will probably be about 2.4 million metric tons this year, matching last year s total, Amir said, reiterating a forecast that the association made last month.

Rubber futures in Tokyo denominated in yen have surged 19 percent this year on tighter supplies and demand from China, the largest user. The March-delivery contract on the Tokyo Commodity Exchange climbed as much as 3 percent today to 332.5 yen per kilogram ($4,046 a metric ton), the highest level since April 19.

Thailand, Indonesia and Malaysia together account for about 70 percent of global natural-rubber production.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net