Rubber rose to a record as the rain cut production in Southeast Asia

Rubber rose to a record as the rain cut production in Southeast Asia, the worsening shortage of demand for the raw material used in tires is expanding in China and India. The spot price in Thailand reached a record high.

Rubber May delivery on the Commodity Exchange in Tokyo rose to as high as 400 yen per kilo (4746 ton), before the night is called trading at 399.6 yen. Trade in this session will be resolved on Tuesday.

Futures advanced after China's central bank failed to interest rates increasing and government reports showed that China's economy is gaining momentum, raising speculation that increased consumer demand will continue to expand. The growth of China's industrial output accelerated to 13.3 percent last month from a year earlier, exceeding economists' estimates, the median of 13 percent.

"The figures of China witnessed rapid economic growth, regardless of government measures to cool the expansion," said Takaki Shigemoto, an analyst at research firm JSC Corp. in Tokyo, by telephone today. "The data, together with the lack of a rate increase by China, has created an optimistic mood among investors, leading to a rally in stocks and commodities markets."

rubber in Shanghai in May delivery rose as much as 4.5 percent to close at a limit of 35,320 yuan ($ 5,302) per tonne. The contract reached a record 38,920 yuan on Nov. 11.

The Shanghai Composite Index, which remains the largest stock exchanges in China, gained as much as 2.9 percent, to 2,923.77. China's central bank ordered banks to set aside more reserves instead of increasing borrowing costs as expected by investors over the weekend.

'Positive news'

central bank's lack of action "is pretty good news:" Zhen, who helps manage 301 million U.S. dollars as general manager of Shanghai Huili Asset Management. "The central bank will be very cautious about interest rates."

China's increased reserve requirements for banks to reduce the chance of an increase in interest rates before the end of this year to less than 50 percent, Credit Suisse Group AG said.

The brokerage reiterated its prediction that China will raise interest rates in more than 200 points at the end of 2011, the report said analyst Dong Tao.

cash rubber in Thailand rose to a record 138.55 baht per kilogram, driven by a shortage of supply and the demonstration in Tokyo, according to the Rubber Research Institute of Thailand.

The price is likely to extend gains as production of latex in the country begins a seasonal decline as early as next month, said Hisaaki Tasaka, Tokyo-based analyst ACE agent Koeki Co.

China, India

"The rain persists in southern Thailand, causing a lack of supply," said Varut Rungkhum, commodities analyst at wealth Agro Ltd. Agent by telephone from Bangkok.

A weaker yen was also supported by rubber Kunthongjun Sureerat analyst Agrow Enterprise Ltd., said by telephone from Bangkok. The dollar was trading at 84.19 yen from 83.95 yen on Friday.

The deficit in India could expand to 840,000 tons in 2020 to 175,000 tons next year, according to Vinod Simon, president of the Association of Industries of All India rubber. In 2015, the shortfall may be 687,000 tons, said Simon.

China sales of passenger cars and sport utility vehicles and multipurpose increased 29.3 percent to 1.34 million last month, exceeding the previous record of 1.32 million in January, according to the China Association of Manufacturers Autos. The pace of growth was the fastest since April.