Rubber game for a monthly gain session & rose as a weakening of the yen

Rubber game for a monthly gain session, rose as a weakening of the yen and limited supply in Thailand, the largest exporter, improving the appeal of raw materials used to manufacture tires and gloves.

Rubber May delivery on the Commodity Exchange in Tokyo rose to 2.6 percent at 366.4 yen per kilogram ($ 4,353 per metric ton) before settling at 360.2 yen. The most active contract, 30 years reaching a high of 383 yen on Nov. 11, surged by 10.2 percent this month, the biggest gain since December.

The dollar headed for its first monthly gain since April against the yen on speculation U.S. economic recovery is accelerating and the tension on the Korean peninsula escalates. Wet weather in southern Thailand continues to cut supply, raise prices, according to the Rubber Research Institute of Thailand. The South accounts for about 80 percent of production.

"The tone of weakening the yen and rising oil prices continue to rubber support," said Varut Rungkhum, commodities analyst agent wealth Agro Ltd. "persistent rain is likely to worsen the low supply situation in Thailand" , said by telephone today from Bangkok.

Supply Association of Natural Rubber Producing Countries, which accounts for about 92 percent of world production would fall 3.8 percent in the three months to December 31 as the rains have stopped playing in Thailand, said the group on 25 November.

Thailand's production is estimated to fall by 28 percent during the period October to December, which will reduce production this year by 1.4 percent to 3.12 million tons, the group said.

The spot price of natural rubber in Thailand stood at 131.55 baht ($ 4.35) per kilogram at present. Auctioned ribbed smoked sheets prices rose 0.4 percent to 123.45 baht, driven by a weaker yen and a shortage of supply, Rubber Research Institute of Thailand, said on its website.

The limited gains

Shanghai Futures Exchange fell as much as 3.8 percent to 29,500 yuan ($ 4.425) per tonne before closing 0.8 percent, to 30,880 yuan. The contract, which reached a record high on November 11, provides for monthly progress meetings.

Gains were limited by concern that the European debt crisis from spreading and speculation that China will raise interest rates, Navarat Kaewpratarn, senior marketing officer in the future Agro Trade Co., said by telephone from Bangkok.

European governments "to 85 billion euros ($ 111 billion) rescue package for Ireland failed to quell market turmoil, threatening the euro as stocks, bonds and the currency fell.

China's recent increases in the reserve requirement ratio for banks is not enough to reverse the excessive liquidity in the system, Zhong Jiyin, an economist at the China Academy of Social Sciences, wrote in a commentary today in the newspaper China Daily. China needs to raise interest rates by another 200 basis points, or 2 percentage points to curb inflation as the excess liquidity, wrote Zhong.