Rubber drops from two-week high

Rubber drops from two-week high

Rubber retreated from the highest level in more than two weeks as the deadlined loomed for United States lawmakers to reach a deal on raising the debt limit and avoiding a default.

The contract for March delivery dropped as much as 1.2% to 267.5 yen a kilogramme (US$2,715 a metric tonne) on the Tokyo Commodity Exchange and was at 268.6 yen on Wednesday at 11.09am in Tokyo. The most-active contract ended at 270.8 yen on Tuesday, the highest settlement since Sept 26. Prices have fallen 11% this year.

Crude oil traded near a three-month low while Fitch Ratings put the US on watch for a possible credit downgrade on Tuesday, citing lawmakers' inability to forge a deal while reiterating that it expects the debt ceiling to be raised.

"Weak crude oil prices and concerns over the US debt problems affect the rubber market," Ryuta Imazeki, analyst at Okachi & Co, said by phone from Tokyo.

Rubber inventories in Qingdao, China's main hub for the commodity, fell to 259,600 tonnes on Tuesday, from 271,300 tonnes at end of September, the Qingdao International Rubber Exchange said in an e-mailed report on Tuesday.

Rubber for January delivery on the Shanghai Futures Exchange dropped 1.8% to 20,800 yuan ($3,409) a tonne. Thai rubber free-on-board gained 1.3% to 80.8 baht ($2.58) a kilogramme on Tuesday, according to the Rubber Research Institute of Thailand.

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