Heavy Rainning in China, Rubber Prices Is Slack

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The price of rubber on the Tokyo and Shanghai exchanges extended its weakness in trading today, Thursday (05/23/2019), due to depressed forecasts of heavy rain that would end production disruptions in China.

Based on Bloomberg data, rubber prices for the most active contract in October 2019 at the Tokyo Commodity Exchange (Tocom) ended down 0.37 percent or 0.70 points at 190.80 yen per kg from the previous closing level of the trade.

On Wednesday (5/22/2019), the October contract rubber prices closed down 2.80 points or 1.44 percent at 191.50 yen per kg.

On the Shanghai Futures Exchange, rubber prices for the most active contract in September 2019 even dropped 300 points or 2.48 percent and closed at 11,800 yuan per ton after finishing 12,100 on Wednesday (5/22).

Reported by Bloomberg, rubber prices in Shanghai posted their biggest two-day decline since June due to pressured expectations that heavy rains would ease the drought in Yunnan province, the largest rubber-producing region in China.

“Heavy rain is expected to occur in several rubber planting areas in China and Thailand. This puts pressure on prices, “said Gu Jiong, an analyst at Yutaka Shoji.

According to China’s National Meteorological Center, moderate to severe rainfall is predicted to flow through plantations in the province, which have been experiencing heat waves and droughts.

“Projections of heavy rainfall for areas in South China, including Guizhou, Yunnan and Guangdong provinces on Thursday and Friday,” explained the China National Meteorological Center.

Previously, the price of rubber was able to strengthen due to ongoing supply disruptions in China due to hot weather in a number of production areas. Jiangcheng Rubber Co. the largest plantation in China, to stop its tapping activities due to drought.

“In addition, the decline in crude oil prices also became a bearish sentiment for rubber,” added Gu Jiong.