Rubber Futures Swing Amid China Demand Concerns, Weaker Yen

Rubber swung between gains and losses as investors weighed a weaker Japanese currency against China’s biggest squeeze on credit in a decade.

The contract for delivery in November on the Tokyo Commodity Exchange gained as much as 1.3 percent and fell as much as 1.1 percent before trading at 230.9 yen a kilogram ($2,364 a metric ton) at 11:57 a.m. Futures touched a nine-month low of 228 yen on June 21.

Japan’s currency fell to 98.06 per dollar, raising the appeal of yen-denominated futures, amid speculation the Federal Reserve may end bond buying by mid-2014 while Japan’s central bank will sustain stimulus to end deflation.

“A weak yen gave the biggest support to futures in Tokyo,” Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo, said by phone today. “Still, concerns about China’s economy are growing, dragging down rubber prices.”

China’s squeeze on credit is increasing the chance that Li Keqiang will be the first premier to miss an annual growth target since the Asian financial crisis in 1998. The Shanghai Composite Index of stocks fell the most since August 2009 yesterday, approaching a bear market. The overnight repurchase rate was 6.47 percent, more than double this year’s average of 3.09 percent.

Rubber for September delivery on the Shanghai Futures Exchange added 0.4 percent to 17,070 yuan ($2,778) a ton. Natural-rubber inventories rose for a third week, climbing 48 tons to 114,556 tons, the bourse said June 21.

Thai rubber free-on-board dropped 0.1 percent to 85.85 baht ($2.76) a kilogram yesterday, according to the Rubber Research Institute of Thailand.