Tokyo rubber futures surged to the highest level since December 1980 on Monday as bullish Technicals attracted strong speculative buying, with a weaker yen and solid oil prices giving additional support.
Indonesian rubber prices were little changed after Saturday's devastating earthquake on the country's Java island, which killed more than 5,100 people, as it did not occur in a rubber producing region and was not seen affecting shipments, traders said.
"I don't think the earthquake is having an impact because it occurred in a non-rubber producing area," said a trader from Thailand's southern city of Hat Yai. "So in terms of rubber plantations in Indonesia, there shouldn't be any effect."
Indonesia's SIR20 block rubber inched up to $2.30 a kg free on board (FOB) for July shipments compared with $2.28 on Friday. The overall trend for rubber was bullish. Key most distant November Tokyo Commodity Exchange rubber futures peaked at 314.5 yen per kg, the highest for a benchmark since December 1980.
"The market is clearly in an upturned looking at Technicals," said Shoji Sugata, assistant manager at Mitsubishi Corporation Futures and Securities Ltd. "Fundamentals are also strong because of tight supply conditions," Sugata said.
November TOCOM rubber was trading at 313.6 yen, up 6.5 yen or 2.12 percent from Friday's close of 307.1 yen. Four other contracts climbed to the daily 8.0-yen limit at one point in the afternoon.
The limitless spot June contract rose as much as by 9.0 yen to 313.3 yen.
TOCOM rubber gained momentum after breaking through the closely watched 300 yen level on Thursday. Key TOCOM rubber futures have jumped more than 20 percent since the start of the month. They were about 5 percent over the 7-day moving average (MA) of 297.5 yen and about 8 percent above the 14-day MA of 289.3 yen.
"We are hearing that supply situations have been improving but until we are sure that there is plenty of physical availability, the current upturned will continue," Sugata said. In Thailand, benchmark RSS3 rubber sheet for July-September shipment was little changed at $2.70 a kg FOB from Friday.
Tyre-grade Standard Thai Rubber, or STR20 block, was little changed at $2.45, from Friday. Malaysia's tyre-grade SMR20 edged up to $2.40 FOB for July shipment from $2.36. Physical rubber supply has been tight as unusually wet weather in Thailand, the world's top producer, has hindered plantation activities resulting in depressing output and forcing shipping delays.
Traders said, however, there are improvements in the weather in Thailand. "In the last few days, we've seen some improvements in the weather, so we see more supply in June and that will help reduce some heat from the market," the Thailand-based trader said.
In Shanghai, the most active August rubber contract closed at 29,310 yuan per tonne, up 1,655 yuan from Friday's settlement.
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