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Death of Thai King Spells Uncertainty for Rubber Market

Summary:
The most actively traded rubber contract on TOCOM for March 2017 delivery lost 6.3 yen to close at 176.7 yen per kilogram on Wednesday, briefly touching a high of 184.0 near the open of the session before falling by over 3% on the day. The same contract touched a yearly high of 184.6 yen per kilogram on Monday, October 17. As with any upheaval, some traders worried that the death of Thailand’s King Bhumibol Adulyadej could spell a time of economic uncertainty for the world’s largest rubber producer. This news comes as Thailand, Indonesia, and Malaysia launched a new regional rubber market on September 26, which is intended to set a benchmark for physical prices in the three countries, which account for 68% of global rubber production. The rubber is to be priced in U.S. cents per kilogram and packaged in contracts of 20.16 tons, with trading times set for Monday through Friday in two sessions from 2:00 – 4:00 and 6:00 – 10:00 GMT. Natural rubber for January 2017 delivery on the Shanghai Futures Exchange closed down by 125 yuan to settle at 13,840 yuan per ton, while the contract for May 2017 delivery closed down by 75 yuan to 14,205 yuan per ton on Wednesday. The front month TSR20 rubber contract on SGX was down 0.60 cents per kilogram after Tuesday’s trading, settling at 151.00 cents per kilogram, while the November RSS3 contract closed up by 2.20 cents to settle at 166.

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The most actively traded rubber contract on TOCOM for March 2017 delivery lost 6.3 yen to close at 176.7 yen per kilogram on Wednesday, briefly touching a high of 184.0 near the open of the session before falling by over 3% on the day. The same contract touched a yearly high of 184.6 yen per kilogram on Monday, October 17.

As with any upheaval, some traders worried that the death of Thailand’s King Bhumibol Adulyadej could spell a time of economic uncertainty for the world’s largest rubber producer.

This news comes as Thailand, Indonesia, and Malaysia launched a new regional rubber market on September 26, which is intended to set a benchmark for physical prices in the three countries, which account for 68% of global rubber production. The rubber is to be priced in U.S. cents per kilogram and packaged in contracts of 20.16 tons, with trading times set for Monday through Friday in two sessions from 2:00 – 4:00 and 6:00 – 10:00 GMT.

Natural rubber for January 2017 delivery on the Shanghai Futures Exchange closed down by 125 yuan to settle at 13,840 yuan per ton, while the contract for May 2017 delivery closed down by 75 yuan to 14,205 yuan per ton on Wednesday.

The front month TSR20 rubber contract on SGX was down 0.60 cents per kilogram after Tuesday’s trading, settling at 151.00 cents per kilogram, while the November RSS3 contract closed up by 2.20 cents to settle at 166.20 cents per kilogram.

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Brent Lantzy
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