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Rubber advanced for a second day as rains in southern Thailand lowered output in the top grower, raising supply concerns.

November-delivery rubber gained as much as 1 percent to 393.2 yen per kilogram ($4,905 per metric ton), the highest level since June 1, before settling at 392.1 yen on the Tokyo Commodity Exchange on Monday. The most-active contract extended last week’s 0.7 percent increase, the fourth consecutive weekly gain.

“Production in southern Thailand remains low as persistent rains disrupt tapping, increasing worries that supply is inadequate to meet demand,” said Chaiwat Muenmee, an analyst at commodity broker DS Futures.

Rains spread across 60 percent of the southern provinces, the main rubber-plantation area, limiting supply, according to the Rubber Research Institute of Thailand.

Farmers in Southeast Asia have begun harvesting after the low-production season, which typically runs from February to May. Output from the region’s major growers, which represent 92 percent of global production, may miss estimates this year as supplies from Indonesia slow, according to the Association of Natural Rubber Producing Countries.

The physical price of Thai rubber advanced 0.3 percent to 158.55 baht ($5.23) per kilogram on Monday, the institute said.

The market also advanced as the dollar declined after a report showed US payrolls grew at the slowest pace in eight months, boosting the appeal of commodities as alternative assets, said Hisaaki Tasaka, an analyst at broker ACE Koeki.

The report followed lower-than-estimated data on factory orders and consumer confidence, spurring speculation the US Federal Reserve may consider a third round of quantitative easing to bolster growth.

 

Bloomberg