Natural rubber futures prices rise on supply concerns

Natural rubber (NR) futures rose for the third week in a row on concerns about supply constraints in several NR producing countries. The NR market closed higher on all major rubber exchanges in the trading week ending August 23, driven by rising synthetic rubber prices and concerns about production shortages.

“This prompted speculators to take long positions, leading to higher prices,” the Japan Exchange Group (JPX) reported on August 26. In Osaka, Japan, OSE rubber rose sharply, up 6.1% week-on-week, while Chinese SHFE and INE rubber prices rose 1.3% and 1%, respectively. The Osaka Exchange (OSE) rubber contract for January delivery closed up 1.9 yen, or 0.56%, at 341.0 yen (about $2.35) per kilogram, a new high since mid-June.

The developments in the crude oil market also had an impact on the rubber market. On August 22, the sharp decline in the crude oil market paused as expectations of a rate cut by the Federal Reserve offset the impact of a series of weak economic data from the world's two largest economies, the United States and China. This dynamic may further affect the market trend of commodities such as rubber.

At the same time, weather factors cannot be ignored. The Thai Meteorological Agency warned that Thailand may usher in heavy rains and floods from August 21 to 27. This weather change may affect the production and supply of agricultural products such as rubber, further exacerbating market volatility.

Regarding the current market situation, Jom Jacob, chief analyst at Indian analysis agency What Next Rubber, said: "The arrival of primary natural rubber products in markets across Southeast Asia remains abnormally low." This view reflects the market's concerns about rubber supply and further explains the reason for the rise in rubber futures prices.