Benchmark Tokyo rubber futures rose by the daily 8-yen limit to the highest level in almost 16 months on Thursday, buoyed by the rally in oil prices, a weaker yen and concerns about tight physical supply. The key contract for April 2008 delivery on the Tokyo Commodity Exchange was trading at 303.0 yen a kg, up 7.3 yen or 2.5 percent from Wednesday's close.
It rose as high as 303.7 yen, the highest for any benchmark since July 4, 2006. Limited supply in the physical market also supported prices, as persistent rain in Thailand, the world's biggest producer, curbed tapping and transportation.
Charlie Aware, director of the Indonesian Rubber Research Institute, said on Wednesday the country's natural rubber output would be unchanged at 2.8 million tonnes in 2008, falling short of an initial target, as erratic weather is likely to disrupt supplies.
Indonesia is the No 2 rubber producer. "Output growth in 2008 is most likely to be much less than 5 percent because of a change in weather pattern," he told Reuters on the sidelines of a rubber conference.
The United Nations weather agency said on Wednesday that a "La Nina" cooling of sea temperatures is underway in the Pacific Ocean and the phenomenon is likely to persist into next year. La Nina, or "Little Girl" in Spanish, is an unusual cooling pattern that usually brings rain to eastern and northern Australia and to Southeast Asia, a major producing region of rubber.
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