SINGAPORE: Japanese rubber futures closed higher on Friday and posted their fourth consecutive weekly gain, as extreme weather in key producers Thailand and Indonesia stoked supply concerns.
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.