Tokyo rubber futures jumped nearly 3 percent by the daily limit to a new 22-year high on Wednesday as lingering tight supply situations prompted heavy bargain-hunting following falls the previous day.
A board recovery of metals on the Tokyo Commodity Exchange also encouraged yen-based investors and investment funds outside Japan to take fresh buy positions on views that the ongoing supply tightness would continue.
Rubber prices of producing nations, such as Thailand and Indonesia, rallied across the board, tracking TOCOM's gain. "Prices are very high. Demand is there, but buyers will have difficulty paying at these price levels, which is not good for the industry as a whole," said a dealer from Thailand's southern city of Hat Yai.
Rubber prices have been buoyant as few physical supplies were available in the market even thought the wintering season appears to have ended in the world's top producer Thailand. In the wintering season, leaves fall and latex output declines by 30 percent on average.
"Supply conditions will remain very tight," the dealer said.
"The wintering is over, but because of the rain farmers cannot go out and do the tapping." Thailand's benchmark RSS3 rubber sheet for June shipment rose to around $2.50 a kg frees on board (FOB) compared with $2.39 the previous day.
Tyre-grade Standard Thai Rubber, or STR20 block, for June shipment was assessed around $2.25 a kg.
In Indonesia, SIR20 was assessed around 98 US cents a pound FOB for June shipment.
Traders said prime sellers wanted to sell the SIR20 grade at 99 cents for July shipment, 99.25 cents for August and 99.50 for September, although they were not traded.
Malaysia's tyre-grade SMR20 was around $2.20 per kg FOB for June shipment from $2.10 on Tuesday.
TOCOM rubber prices rallied as short-term investors and overseas investment funds bought based on bullish fundamentals and technical.
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