Year: 2016 | Month: March | Volume 61 | Issue 1
Price formation and supply response of natural rubber
DOI:10.5958/0976-4666.2016.00024.3
Abstract:
Natural rubber is a major economic plant in the plantation sector in terms of providing income to the growers for a long-time and also it serves as raw materials for various industrial products. Over 20 million families are dependent on rubber cultivation for their livelihood in the world natural rubber market. Natural rubber price is influenced by many factors such as weather, currency exchange rates, oil prices, policy changes in major rubber producing and consuming countries. The specific objective of the study was to identify the factor responsible for price formation and supply response of natural rubber. The result shows that the price formation of natural rubber revealed that the futures price, international price, and synthetic rubber price were statistically significant where as crude oil price and exchange rate were non-significant. From supply response analysis, it was inferred that price was a significant factor explaining output growth. The analysis confirmed that lagged price exerted a positive influence on natural rubber area.
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