(Nov 21): Rubber futures in Tokyo had the biggest weekly drop in seven weeks as a producer meeting ended without yielding details on how much and when they would cut exports to shore up prices.
The contract for April delivery on the Tokyo Commodity Exchange fell 2.1 percent, the biggest drop for a most-active contract since Nov. 5, to settle at 201.6 yen a kilogram ($1,712 a metric ton). Futures declined 1.7 percent this week, the most since Oct. 3.
Thailand, Indonesia and Malaysia, which produce about 70 percent of world’s natural rubber, agreed to cut exports from next year to drain supplies, though they have yet to decide the amount and timing of the reduction, according to the outcome from ministerial meeting yesterday in Kuala Lumpur.
“Investors were disappointed by a lack of details in the producers’ agreement,” said Takaki Shigemoto, an analyst at JSC Corp., a researcher in Tokyo.
On the export cut, a working group was assigned to assess the amount with implementation at a suitable time in coming months, Yium Tavarolit, chief executive officer of International Rubber Consortium Ltd., said yesterday.
The grower group also agreed to form a regional market in the next 18 months and increase domestic use of the commodity used in tires by as much as 10 percent annually, Malaysian Plantation Industries and Commodities Minister Douglas Uggah Embas said after the meeting yesterday.
“A big unaddressed issue is what happens to production in excess of export needs: who’s going to store and finance that?” Michael Coleman, managing director of RCMA Asset Management Pte, said in an e-mail today. The company manages the Merchant Commodity Fund worth $201 million at the end of October.
Rubber prices from Tokyo to Thailand and Singapore have rebounded after touching their lowest levels in more than five years in October as producer groups pledged to refrain from selling below $1.50 a kilogram. The council, which represents government officials, growers and exporters, last cut shipments by 300,000 tons in the six months through March 2013.
Futures in Tokyo tumbled 27 percent this year as concerns mounted that demand from China would weaken as the economy in the top consuming nation slowed. Prices recovered 16 percent from a five-year low of 173.8 yen reached on Oct. 3. Export rates in Thailand have gained 8.8 percent to 53.55 baht ($1.6) a kilogram since falling to 49.20 baht on Oct. 2, the lowest since December 2008.
In Shanghai, rubber for delivery in January fell 2.8 percent to close at 12,670 yuan ($2,068) a ton, dropping 2.1 percent this week.