Rubber Gains for First Time in Seven Days as Thai Supply Drops

By Aya Takada

Nov. 26 (Bloomberg) -- Natural rubber futures advanced for the first time in seven days as supply in Thailand, the world’s largest exporter, declined after producers agreed to reduce output on weaker demand for the commodity used to make tires.

Thailand, Indonesia and Malaysia, the world’s three biggest producers, agreed last month to cut supply to boost prices after futures in Tokyo reached a three-year low of 154.6 yen Oct. 28. Plantation work slowed in Thailand this month, leading to a decrease in shipments, said Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co.

“Supply in Thailand decreased but a rise in price may not be sustained as demand is also falling,” Shigemoto said by phone.

Rubber for May delivery gained 2.2 percent to 134.1 yen a kilogram ($1,410 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break.

Futures tumbled to 127.6 yen on Nov. 21, the lowest since January 2005, on concern a deepening global recession will reduce car sales and sap demand for rubber. Prices reached a 28-year high of 356.9 yen on June 30.

March-delivery rubber on the Shanghai Futures Exchange, the most-active contract, fell 0.9 percent to 11,350 yuan ($1,662) a ton at 10:59 a.m. local time.

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