Rubber futures in Tokyo fell to lowest in more than two months on concern demand for tires may drop. Japanese government said that their economy was deteriorating. It is concerned that the slowing global economy may hurt rubber market. Futures also declined in strong output from Thailand, on account of high-production season. Losses were limited by falling yen against the dollar. The Japanese currency declined to the lowest in almost seven months against dollar today (IUSD = 109.58 Japanese yen).
A weaker yen inflates the yen based futures prices. The U.S. crude oil is traded at 118.80 per barrel. Asian physical rubber prices is under pressure from a drop in Tokyo futures prices. Malaysia rubber prices ended lower for the fifth consecutive day today with traders remaining on the sidelines.
The natural rubber prices is to their highest levels. It is a dangerous signal to increase output, even if global economy keep downward movement. There is an appetite to plant more trees when prices are high, Thailand, Indonesia and Malaysia together account for more than 70% of global output, are likely to resist the temptation to plant more trees. Cash rubber prices have risen more than 19% this year.
The benchmark rubber contract on the Tokyo Commodity Exchange for January delivery went down by 2 yen, traded at 314.7.
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