006 jom jacob - global nr prices 201012 - rubber boardclinic.rubberboard.org.in/pdf/ircpdf/006 jom...
TRANSCRIPT
31‐10‐2012
1
Jom JacobThe Rubber Board*, India
(* The views presented here do not necessarily imply those of the organization )
To understand the behavior of NR prices across key markets, during 2007-2012, with focus on: The trends, trend-breaks and volatility.
To identify the key determinants of the prices.
To make an assessment on the emerging trends in global supply & demand and their potential influence on NR market.
31‐10‐2012
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50
100
150
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350
400
450
500
550
600
6‐Jan‐07
6‐M
ar‐07
6‐M
ay‐07
6‐Jul‐07
6‐Sep‐07
6‐Nov‐07
6‐Jan‐08
6‐M
ar‐08
6‐M
ay‐08
6‐Jul‐08
6‐Sep‐08
6‐Nov‐08
6‐Jan‐09
6‐M
ar‐09
6‐M
ay‐09
6‐Jul‐09
6‐Sep‐09
6‐Nov‐09
6‐Jan‐10
6‐M
ar‐10
6‐M
ay‐10
6‐Jul‐10
6‐Sep‐10
6‐Nov‐10
6‐Jan‐11
6‐M
ar‐11
6‐M
ay‐11
6‐Jul‐11
6‐Sep‐11
6‐Nov‐11
6‐Jan‐12
6‐M
ar‐12
6‐M
ay‐12
6‐Jul‐12
6‐Sep‐12
Prices of STR‐20 & SMR‐202011:EU crisis aggravates.Inflation in China & India.Demand slows down.Shift to SR.
May 2008Financial capital flow to Commodities.Oil touched 143 USD/barrel.Supply slowed down.
July 2008US financial crisis. Drastic fall in auto sales.Global economic crisis.US $ strengthens. Oil falls to 68US$/barrel.Contract defaults in NR markets
Sep. 2009.Economic stimulus measures‘Cash for clunkers’.Crude oil recovers.NR supply falls on adverse weather.Export curtailment under ITRC.Strengthening of Baht, Rupiah, RM.Capital flows to Asian financial markets.
2010: Q1 to Q3Demand slows down.
Oct. 2010Tightness in supply.Flow of financial capitalAppreciation of Baht, Rupiah, RM.
March 2011Tsunami n Japan
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50
100
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600
6506‐Jan‐07
17‐Feb
‐07
31‐M
ar‐07
12‐M
ay‐07
23‐Jun
‐07
4‐Aug
‐07
15‐Sep
‐07
27‐Oct‐07
8‐Dec‐07
19‐Jan
‐08
1‐Mar‐08
12‐Apr‐08
24‐M
ay‐08
5‐Jul‐08
16‐Aug
‐08
27‐Sep
‐08
8‐Nov‐08
20‐Dec‐08
31‐Jan
‐09
14‐M
ar‐09
25‐Apr‐09
6‐Jun‐09
18‐Jul‐09
29‐Aug
‐09
10‐Oct‐09
21‐Nov‐09
2‐Jan‐10
13‐Feb
‐10
27‐M
ar‐10
8‐May‐10
19‐Jun
‐10
31‐Jul‐10
11‐Sep
‐10
23‐Oct‐10
4‐Dec‐10
15‐Jan
‐11
26‐Feb
‐11
9‐Apr‐11
21‐M
ay‐11
2‐Jul‐11
13‐Aug
‐11
24‐Sep
‐11
5‐Nov‐11
17‐Dec‐11
28‐Jan
‐12
10‐M
ar‐12
21‐Apr‐12
2‐Jun‐12
14‐Jul‐12
25‐Aug
‐12
6‐Oct‐12
Prices of RSS‐3 in Bangkok & RSS‐4 in Kottayam
RSS-3 Bangkok
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350
400
450
500
550
600
650
6‐Jan‐07
17‐Feb‐07
31‐M
ar‐07
12‐M
ay‐07
23‐Jun‐07
4‐Aug‐07
15‐Sep‐07
27‐Oct‐07
8‐Dec‐07
19‐Jan‐08
1‐M
ar‐08
12‐Apr‐08
24‐M
ay‐08
5‐Jul‐08
16‐Aug‐08
27‐Sep‐08
8‐Nov‐08
20‐Dec‐08
31‐Jan‐09
14‐M
ar‐09
25‐Apr‐09
6‐Jun‐09
18‐Jul‐09
29‐Aug‐09
10‐Oct‐09
21‐Nov‐09
2‐Jan‐10
13‐Feb‐10
27‐M
ar‐10
8‐M
ay‐10
19‐Jun‐10
31‐Jul‐10
11‐Sep‐10
23‐Oct‐10
4‐Dec‐10
15‐Jan‐11
26‐Feb‐11
9‐Apr‐11
21‐M
ay‐11
2‐Jul‐11
13‐Aug‐11
24‐Sep‐11
5‐Nov‐11
17‐Dec‐11
28‐Jan‐12
10‐M
ar‐12
21‐Apr‐12
2‐Jun‐12
14‐Jul‐12
25‐Aug‐12
6‐Oct‐12
Prices of RSS & TSR
RSS-3 Bangkok
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STR-20 Bangkok SMR-20 Kuala Lumpur
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100
200
300
400
500
600
700
2007 2008 2009 2010 2011 2012
0
100
200
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400
500
600
2007 2008 2009 2010 2011 2012
RSS-3 Bangkok RSS-4 Kottayam
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300
400
500
600
700
2007 2008 2009 2010 2011 2012
0
100
200
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400
500
600
2007 2008 2009 2010 2011 2012
31‐10‐2012
5
0
5
10
15
20
25
2007 2008 2009 2010 2011 2012
RSS 4
SMR 20
RSS 3
STR 20
31‐10‐2012
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0
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8000
8500
9000
9500
10000
10500
11000
2007 2008 2009 2010 2011 2012
0
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8,000
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9,000
9,500
10,000
10,500
11,000
11,500
2007 2008 2009 2010 2011 2012
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NR prices cannot be explained exclusively on demand and supply.
NR is an internationally traded commodity and its production is export-oriented in major producing countries.◦ Thailand: 88 % exported◦ Indonesia: 87 % exported
Currency rates against US$ hold a profound influence on the prices.
Due to speculation on possible substitution between NR and SR, crude oil market can influence NR prices.
Japanese yen can influence through TOCOM rubber futures.
Hedge funds can drive rubber market through speculative investment decisions in response to changing economic outlook, policies and geo-political developments.
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80
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95
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101
104
107
30
80
130
180
230
280
330
6‐Jan‐07
6‐Mar‐07
6‐May‐07
6‐Jul‐0
7
6‐Sep‐07
6‐Nov
‐07
6‐Jan‐08
6‐Mar‐08
6‐May‐08
6‐Jul‐0
8
6‐Sep‐08
6‐Nov
‐08
6‐Jan‐09
6‐Mar‐09
6‐May‐09
6‐Jul‐0
9
6‐Sep‐09
6‐Nov
‐09
6‐Jan‐10
6‐Mar‐10
6‐May‐10
6‐Jul‐1
0
6‐Sep‐10
6‐Nov
‐10
6‐Jan‐11
6‐Mar‐11
6‐May‐11
6‐Jul‐1
1
6‐Sep‐11
6‐Nov
‐11
6‐Jan‐12
6‐Mar‐12
6‐May‐12
6‐Jul‐1
2
6‐Sep‐12
Currency Indices and NR Price Indices
Currency Index
NR price index
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06‐Jan‐07
06‐Feb‐07
06‐M
ar‐07
06‐Apr‐07
06‐M
ay‐07
06‐Jun‐07
06‐Jul‐07
06‐Aug‐07
06‐Sep‐07
06‐Oct‐07
06‐Nov‐07
06‐Dec‐07
06‐Jan‐08
06‐Feb‐08
06‐M
ar‐08
06‐Apr‐08
06‐M
ay‐08
06‐Jun‐08
06‐Jul‐08
06‐Aug‐08
06‐Sep‐08
06‐Oct‐08
06‐Nov‐08
06‐Dec‐08
06‐Jan‐09
06‐Feb‐09
06‐M
ar‐09
06‐Apr‐09
06‐M
ay‐09
06‐Jun‐09
06‐Jul‐09
06‐Aug‐09
06‐Sep‐09
06‐Oct‐09
06‐Nov‐09
06‐Dec‐09
06‐Jan‐10
06‐Feb‐10
06‐M
ar‐10
06‐Apr‐10
06‐ M
ay‐10
06‐Jun‐10
06‐Jul‐10
06‐Aug‐10
06‐Sep‐10
06‐Oct‐10
06‐Nov‐10
06‐Dec‐10
06‐Jan‐11
06‐Feb‐11
06‐M
ar‐11
06‐Apr‐11
06‐M
ay‐11
06‐Jun‐11
06‐Jul‐11
06‐Aug‐11
06‐Sep‐11
06‐Oct‐11
06‐Nov‐11
06‐Dec‐11
06‐Jan‐12
06‐Feb‐12
06‐M
ar‐12
06‐Apr‐12
06‐M
ay‐12
06‐Jun‐12
06‐Jul‐12
06‐Aug‐12
06‐Sep‐12
06‐Oct‐12
Crude Oil Prices and TOCOM RSS-3 Prices
Brent crude oil spot
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Ln PriceNR = 0.7406 Ln PriceOil + 2.3136(t-Ratio: 20.1)
Each % change in crude oil price induces 0.74 % change in NR price in the same direction.
It is through the TOCOM rubber futures that significance of Japanese yen arises among the key drivers of NR prices.
Japanese yen is one of the currencies which investors often consider as a safe-haven under an uncertainty.
Whenever the yen gains strength, the BoJintervenes in view of the potential damage of a stronger yen to the export-dependent economy.
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6‐Jan‐07
24‐Feb
‐07
14‐Apr‐07
2‐Jun‐07
21‐Jul‐07
8‐Sep‐07
27‐Oct‐07
15‐Dec
‐07
2‐Feb‐08
22‐M
ar‐08
10‐M
ay‐ …
28‐Jun
‐08
16‐Au g
‐08
4‐Oct‐08
22‐Nov
‐08
10‐Jan
‐09
28‐Feb
‐09
18‐Apr‐09
6‐Jun‐09
25‐Jul‐09
12‐Sep
‐09
31‐Oct‐09
19‐Dec
‐09
6‐Feb‐10
27‐M
ar‐10
15‐M
ay‐ …
3‐Jul‐1
0
21‐Aug
‐10
9‐Oct‐10
27‐Nov
‐10
15‐Jan
‐11
5‐Mar‐11
23‐Apr‐11
11‐Jun
‐11
30‐Jul‐11
17‐Sep
‐11
5‐Nov
‐11
24‐Dec
‐11
11‐Feb
‐12
31‐M
ar‐12
19‐M
ay‐ …
7‐Jul‐1
2
25‐Aug
‐12
13‐Oct‐12
Japanese Yen and TOCOM RSS-3 Futures
Commodity markets have emerged as the most important avenue for speculative investments.
Near-zero interest rates in advanced countries attract investment funds to fast-growing Asian markets.
Flooding of such funds can causes boom in commodity prices through speculative investments.
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Under uncertainty, they leave commodities to safe-haven currencies or gold.
The period from Q2 2011 onwards has seen a sharp reduction in speculative investments in response to the Euro crisis, political unrest in the Middle East and North Africa, and the tsunami in Japan.
50.00
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250.00
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450.00
500.00
550.00
0
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6‐Jan
‐07
24‐Feb‐07
14‐Apr‐07
2‐Jun‐07
21‐Jul‐07
8‐Sep
‐07
27‐Oct‐07
15‐Dec
‐07
2‐Feb
‐08
22‐Mar‐08
10‐May‐08
28‐Jun
‐08
16‐Aug‐08
4‐Oct‐08
22‐Nov‐08
10‐Jan
‐09
28‐Feb‐09
18‐Apr‐09
6‐Jun‐09
25‐Jul‐09
12‐Sep‐09
31‐Oct‐09
19‐Dec
‐09
6‐Feb
‐10
27‐Mar‐10
15‐May‐10
3‐Jul‐10
21‐Aug‐10
9‐Oct‐10
27‐Nov‐10
15‐Jan
‐11
5‐Mar‐11
23‐Apr‐11
11‐Jun
‐11
30‐Jul‐11
17‐Sep‐11
5‐Nov
‐11
24‐Dec
‐11
11‐Feb‐12
31‐Mar‐12
19‐May‐12
7‐Jul‐12
25‐Aug‐12
13‐Oct‐12
Tocom futures
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Ln(RSS3)Bangkok
= 1.0374 Ln(RSS3)Tocom - 0.6907
(t-ratio: 35.69)R2 =0.81
31‐10‐2012
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Yielding area expanded this year by 115,000 ha.
But, average yield is on a decline. Supply cannot rise beyond 0.6% this year. Export curtailment under the ITRC can take the supply to negative territory.◦ ITRC decided to curtain exports by 300,000 ton
during the period from October 2012 to March 2013.
Yielding area expanded 67,000 ha in 2012. Fall in average yield this year will bring down
production by at least 0.1%. ITRC’s intervention can further lower the
supply
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Area under tapping has come down by 17,000 ha.
There is a decline in average yield this year.
This year’s supply will be lower by at least 4.7%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2012 2013 2014 2015 2016 2017 2018 2019
Non-ANRPC
ANRPC
Aggregate
31‐10‐2012
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400
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800
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1000
1100
1200
1300
‐2
0
2
4
6
8
10
12
2010 2011 2012 2013
China
India
World
U.S.
Euro Area
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Q4 2011 Q4 2012
U.S. 2.0 1.7
Euro Area 0.7 -0.5
China 8.9 7.9
India 5.0 5.5
World 3.2 3.0
85
90
95
100
105
110
115
Brent spot average in US$ / barrel
Average for 2012: 111.8Average for 2013: 103.4
31‐10‐2012
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This year’s low supply and the seasonal down beginning from December 2012 will stay as a plus factor until May 2013.
But, the demand-prospects heavily depend on the emerging global economic situation. IMF’s forecasts do not favour a revival of the demand sector during 2012. No marked recovery is expected for 2013 either.
Oil forecasts are not favourable to NR at least till the end of 2013.
Economic uncertainties are likely to reduce the appetite for speculative investments. Investors would rather prefer safe-haven gold and strong currencies.
Despite a very low supply, NR market is unlikely to gain momentum until the global economy takes a clear recovery path.
31‐10‐2012
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Thank you for your attention