Monday, December 12, 2011

Regional physical market to create a new benchmark

Rubber has lost 33% on the Tokyo Commodity Exchange this year from a peak due to Europe's debt crisis raising concern that demand may decline. Today, January & May delivery contract closed at 264.7 yen & 276.9 yen a kg respectively, on Tocom. Representatives from the three governments - Thailand, Indonesia and Malaysia, are meeting to discuss stabilising prices and proposed to establish a physical market.

There’s a desire from the governments of the three countries to set up a market as soon as possible that would be based on the real supply and demand fundamentals. Establishment of a market would help producers trade with more transparent and reliable prices. The contract would most likely trade in dollars, said Tjahjono Budiarto Tjandra, chairman of the Committee on Strategic Market Operations at the International Rubber Consortium Ltd., in Bali.

Establishing a physical market may involve the Indonesia Commodity & Derivatives Exchange, the Agricultural Futures Exchange of Thailand and the Malaysia Derivatives Exchange.

Read lot more in Rubber4U – 15th December 2011 issue

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