Tokyo rubber futures rose nearly 3 percent to their highest point in a year on Tuesday as strong oil prices and optimism about recovering demand boosted sentiment. The key Tokyo Commodity Exchange rubber contract for March delivery was up 6.0 yen or 2.7 percent at 224.8 yen per kg at 0528 GMT. It earlier rose 2.9 percent to as high as 225.1 yen, the highest since October last year.
A rise in prices of other commodities, notably gold which is hovering near record peaks, was also giving rubber a boost, a Tokyo-based broker said. He also said tight physical supplies were helping to lift TOCOM rubber prices. "The extent of the disruption is not clear, but rain is causing tapping to slow in some of the producing areas," he said.
Traders in Thailand, the world's biggest rubber producer, have said rain was causing production to fall there as well as in Malaysia, the third largest producer. They also say that wintering in Indonesia, the second-largest producer after Thailand, has also meant less rubber.
Oil topped $80 per barrel to touch a one-year high on a weak dollar and firm US stock markets. In the physical market, most sellers of Indonesia's SIR grade rubber were reluctant to trade due to high raw material prices, while prices of key rubber grades rose in line with the rise in TOCOM rubber.