Japanese rubber futures extend rally on weather woes
The Osaka Exchange (OSE) rubber contract for December delivery was up 2.5 yen, or 0.79%, at 317.3 yen ($2.16) per kg. The contract gained 1.67% this week.
The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery rose 120 yuan, or 0.84%, to 14,360 yuan ($2,002.65) per metric ton. The most-active August butadiene rubber contract on the SHFE climbed 155 yuan, or 1.35%, to 11,615 yuan per ton.
Top rubber producer Thailand's meteorological agency warned of heavy rains and accumulations that could cause flash floods and overflows from July 11-13. Sudden heavy rains in southern Thailand caused severe floods and water logging, while a drought in Sumatra, Indonesia continued, Chinese commodities data provider Longzhong Information said in a note.
With these two major production regions suffering from extreme weather at the same time, many rubber plantations were forced to delay harvesting, a rare supply shock, Longzhong said. Rubber futures, which were trading at a discount to physical breakeven levels, are now playing catch-up, a Singapore-based trader said.
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