Rubber Futures Trade Near Six-Week Low on Slump in Oil, Yen

By Aya Takada

July 17 (Bloomberg) -- Natural rubber futures in Tokyo traded near a six-week low as a slump in oil weakened the appeal of commodities as an inflation hedge and the Japanese currency's drop versus the dollar supported yen-denominated contracts.

Futures also tend to move in the same direction as oil as rival synthetic rubber is made from naphtha, distilled from petroleum. Crude oil in New York tumbled yesterday after a report showed an unexpected gain in U.S. supplies.

Rubber for December delivery was unchanged at 329.2 yen a kilogram ($3,134 a metric ton) on the Tokyo Commodity Exchange at 10:13 a.m. local time. The commodity, used to make car tires, fell to the lowest since June 5 yesterday after reaching a 28- year high of 356.9 yen on June 30.

The dollar advanced against the yen after sinking to the lowest in almost two months yesterday as better-than-estimated earnings at Wells Fargo & Co. pushed U.S. equities higher. A weaker yen is positive for prices of yen-denominated contracts as rubber trades globally in dollars.

Rubber prices were capped by the prospect of increased supply from Thailand, the world's largest producer and exporter. Thai rubber planters have doubled the number of days they tap trees after rain in the nation's south receded, Wirut Niumlek, deputy director of the farm ministry's Rubber Estate Organization, said July 15 in Bangkok.

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net