TOKYO: Japanese rubber futures hit a nearly 3-month high on Friday, tracking a rally in the Shanghai market amid concerns over tight supplies and optimism that central banks’ interest rate cuts will help economic growth.

The Osaka Exchange (OSE) rubber contract for November delivery finished up 15.5 yen, or 4.5%, at 357.2 yen ($2.3) per kg, after reaching 357.8 yen, its highest since March 19. It rose 4.8% for the week, in a fifth straight weekly gain.

The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery soared 810 yuan to finish at 16,020 yuan ($2,212) per metric ton, its highest closing since February 2021. “Limited supplies from producing countries following a period of seasonal output drop could have driven the gains,” said Jiong Gu, an analyst at Yutaka Trusty Securities Co.

Producers’ reluctance to sell in light of new European Union deforestation rules, which may provide them an opportunity to obtain premiums, could also have contributed to a sense of tightness, he added.

A law approved by the EU - set to come into force at the end of this year - aims to prevent agricultural commodities linked to deforestation around to world from entering the European market, which could affect a flow of palm oil, coffee, cocoa and rubber.