Transcript Can Stakeholders in Natural Rubber Hedge in Crude Oil? An ex

Effect of Crude Oil price on World Natural
Rubber Price
Group Yen
Introduction
Important
- Local exporters need to know world market price.
- They should have tool to predict world market price before
purchase at the local auction .
- Then only they can be success in their business.
Objectives
• To measure magnitude of effect of crude oil price changes on
to world natural rubber prices.
Factors Effecting on Natural rubber Price
- Crude oil price
Can Stakeholders in Natural Rubber Hedge in Crude Oil?
An ex-ante analysis by Nilanjan Ghosh and Harish Purohit
They found in their analysis that Natural rubber Price and
Crude oil price have a positive correlation.
- GDP growth of industrial countries
- Climatic changes
Theory
- Relationship between crude oil price and synthetic
rubber price.
- Synthetic rubber price and natural rubber price
- Cross price elasticity
Cross price elasticity
EQbPm =
Qb × Pm
Pm × Qb
EQbPm = Percentage change in the quantity
demand of natural rubber from a 1 percent
change in crude oil price
Qb = Quantity of demand of natural rubber
Pm = Price of crude oil
Hypothesis
- There is a relationship between crude oil price and world
natural rubber price.
Methodology
Population
-world natural rubber industry
Sample
– monthly crude oil price and natural rubber price.
Sample Size
– Ten years data or 120 months data
Sampling method
- What they used ?
Measurements
- Cross price elasticity between crude oil and natural
rubber