Rubber Futures Rise

Rubber futures rose to around 257 US cents per kilogram, not far from their highest level since 2013, reached in mid-October, as persistent supply concerns supported prices. Heavy rainfall and flash-flood warnings across southern Thailand threatened to disrupt tapping activity through October 28, potentially limiting latex collection in key producing areas. El Niño-related weather conditions also continued to affect cup-lump quality and production, while raw-material shortages in Indonesia added to supply constraints. Meanwhile, improving rainfall in northern Thailand has allowed farmers to gradually resume tapping, supporting a recovery in output and providing some relief from earlier disruptions. However, gains were capped by lower crude oil prices, which made petroleum-based synthetic rubber more competitive and potentially diverted demand away from natural rubber.

Rubber futures traded around 256 US cents per kilogram, hovering near their lowest since early October. The supply outlook has improved as rainfall eased in Thailand ahead of the fourth-quarter peak production season, raising expectations that tapping activity will recover from recent disruptions caused by heavy rain and flooding. Greater raw-material availability could relieve supply tightness and ease raw material prices, if favorable weather conditions persist. Looking ahead, the expected persistence of the El Niño phenomenon through February 2027 poses a major risk to production. Meanwhile, persistently weak tyre demand from China, the world’s largest rubber consumer, also weighed on prices. Elevated oil prices helped limit the downside by raising the cost of petroleum-based synthetic rubber, making natural rubber relatively more competitive.

Rubber futures rose to around 265 US cents per kilogram, hitting its highest level since early 2013, driven by persistent supply concerns. Flooding in Thailand, a major producer, has disrupted output and operations at several auto parts suppliers, affecting deliveries to automakers. Heavy rainfall across producing regions is expected to persist until mid-October. Adding to weather-related concerns, the World Meteorological Organization said El Niño is nearly certain to continue through February 2027, posing further risks to production. Meanwhile, demand remained subdued in China, where semi-steel and all-steel tire production rates fell sharply amid holiday-related factory shutdowns, weak orders, and cautious purchasing. Easing oil prices also exerted downward pressure, lowering synthetic rubber production costs and reducing the appeal of natural rubber as a substitute.