Natural Rubber Commodities Project Grace and Vickie

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Natural Rubber Commodities Project

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Natural Rubber Commodities Project Grace and Vickie

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

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