Japan rubber futures rise on supply concerns
Japanese rubber futures rose on Tuesday helped by supply concerns, while a weaker yen also lent support to the market. The Osaka Exchange (OSE) rubber contract for August delivery closed up 1.1 yen, or 0.37%, at 299.4 yen ($1.99) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery fell 70 yuan to finish at 13,780 yuan ($1,914.21) per metric ton. Rubber prices are poised to gain further momentum in the months ahead fuelled by growing concerns about availability, said Jom Jacob, co-founder of India-based analysis firm What Next Rubber. * The current rubber shortage is attributed to the “annual leaf-changing season of rubber trees”, as well as “large-scale crop shift from rubber to other crops such as oil palm and durian, especially in Thailand and Indonesia”.
The Japanese yen held at 150.49 against the dollar, after data showed Tokyo core inflation sped up to 2.5% in February, from 1.8% the previous month. A weaker currency makes yen-denominated assets more affordable to overseas buyers. Japan is seeing early signs of achieving a positive cycle of rising inflation and wages.
Despite the supply shortage propping up prices, demand prospects moving forward may be weak in view of challenges in key buyer economies, Jacob added. Most Asian stocks slid, led by sharp declines in Hong Kong as the start of China’s week-long annual session of parliament disappointed investors.
China retained last year’s target for economic growth of “around 5%” for this year, and announced plans to run a budget deficit of 3% of economic output. The front-month rubber contract on Singapore Exchange’s SICOM platform for April delivery last traded at 159.6 US cents per kg, down 0.25%.
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