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Natural Rubber Commodities Project Grace and Vickie

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Natural Rubber Commodities Project

Natural Rubber Commodities Project


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  • 1. By: Vickie Zhao and Grace Ngau
  • 2.
    • Production
      • Where
        • Thailand, Indonesia, Malaysia
        • Most rubber from petroleum and latex in tree
        • More than ¼ all rubber from latex in trees
      • Who
        • Farmers
  • 3.
    • Trade futures contracts on commodities
    • It protects farmers from price drops & and buyers from price rises
    • EFP
  • 4.
    • Tires and tubes = largest consumer
    • Household and industrial products
    • Elastic
      • Textile industry
  • 5.
    • Latex
      • Found in trees
      • Used to produce natural rubber
      • Decrease in supply = increase in price = demand for alternative product (synthetic rubber)
  • 6.  
  • 7.
    • Mainly produces tires; more cars on road, more rubber produced.
    • Increase in oil = less cars on road.
    • Even though rubber’s price doubled, even tripled in the past few years, it started dropping these few months.
    • Solution
  • 8.
    • Futures Contracts (Hedging): benefit both consumers and producers
      • Consumers: hedge against price increases; buy in futures market to ensure they will make profit despite changes in the price of rubber
      • Producers: sell in futures market to hedge against a lower selling price for their rubber. Ensures that drop in prices are alleviated by gains in the futures market.
  • 9.
    • Exchange for Physicals (EFP)
      • Where a buyer and seller exchange a futures position for a physical one.
      • Allows players to choose their counter parties (people involved in the transaction), type of rubber delivered, and time of delivery.
  • 10.
    • Sessional Trading
      • Fixed single contract price for each contract month in each session
      • All trading is carried out at a single price when total amount of selling order and buying orders become equal
      • Price of the contract is raised or lowered if the volume of selling and buying differs; this continues until both volume of orders are equal
  • 11.
    • Running Market
      • A market where prices of goods are changing rapidly in one direction, with very few price changes in the other direction
      • No major fluctuations in prices
      • Reduces chance of unpredictable changes in the market that will affect buyers and sellers
  • 12.
    • International Institute of Synthetic Rubber Producers: Global organization that includes most of the world's synthetic rubber manufacturers. Based in Houston.
    • International Rubber Study Group: International association of government bodies and other groups involved in the rubber industry. Headquarters in London.
  • 13.
    • Government policies
    • Growth in industrial production
    • International rubber price movements
  • 14.
    • &quot;Exchanges in Japan.&quot; 2005. OKACHI & CO, LTD. 1 Nov. 2008 <http://www.okachi.co.jp/english/products/index.html>.
    • &quot;World financial crisis doubling up rubber industry.&quot; 14 Oct. 2008. VietNamNet Bridge. 1 Nov. 2008 <http://english.vietnamnet.vn/biz/2008/10/808434/>.
    • &quot;Information on Rubber&quot;. UNCTAD. June, 12, 2007 <http://www.unctad.org/infocomm/anglais/rubber/sitemap.htm>. ( A note about this website, we used many sub sites that were the sub sections of information on rubber.)
    • &quot;Rubber&quot;. Wikimedia Foundation, Inc.. 4 November 2008 <http://en.wikipedia.org/wiki/Rubber>.
    • &quot;Commodity markets&quot;. Wikimedia Foundation, Inc.. 31 October 2008 <http://en.wikipedia.org/wiki/Commodity_market>.
    • &quot;Rubber Industry Trade Associations&quot;. Crain Communications Inc. 2008 <http://www.rubbernews.com/subscriber/hotlinks.html>.