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BASIC FEATURES OF RUBBERBASIC FEATURES OF RUBBER

MARKETMARKET

A high volatile marketA high volatile market

Highly regulated market until recentlyHighly regulated market until recently

High political sensitivity-large number ofHigh political sensitivity-large number ofdealers and growers-decides thedealers and growers-decides theeconomic geography of a Stateeconomic geography of a State

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The ProblemThe Problem

To understand and analyse the rubberTo understand and analyse the rubber

market, especially derivatives market.market, especially derivatives market.The recent changes in the economyThe recent changes in the economy

demand an understanding of thedemand an understanding of the

relationships between spot and futures,relationships between spot and futures,

price flexibility, and relationshipsprice flexibility, and relationships

according to the extent of the market .according to the extent of the market .

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HYPOTHESISHYPOTHESIS

It is hypothesized that a futures marketIt is hypothesized that a futures market

for natural rubber helps to reduce violentfor natural rubber helps to reduce violentfluctuations in prices ,and thereby tofluctuations in prices ,and thereby to

protect the interests of the majority ofprotect the interests of the majority of

the participants in the marketthe participants in the market

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Objectives of the StudyObjectives of the Study

To analyze the circumstances under which futures market wasTo analyze the circumstances under which futures market wasintroduced for natural rubberintroduced for natural rubber

To analyze the relationship between spot and futures markets.To analyze the relationship between spot and futures markets.

To analyze the price behavior in the spot and futures markets,To analyze the price behavior in the spot and futures markets,

with reference to both the domestic and international markets.with reference to both the domestic and international markets.

To analyze the stake holder response to futures markets, withTo analyze the stake holder response to futures markets, with

specific focus on, manufacturers ,traders and the planters.specific focus on, manufacturers ,traders and the planters.

To study the effectiveness of various regulatory mechanisms,To study the effectiveness of various regulatory mechanisms,such as the Forward Markets Commission , and the Rubbersuch as the Forward Markets Commission , and the RubberBoard, in relation to commodity futures trading in the countryBoard, in relation to commodity futures trading in the country..

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MethodologyMethodology

(a) Reviews and Discussions(a) Reviews and Discussions

(b) Analysis of Secondary Data(b) Analysis of Secondary Data

(c) Collection of Field Data, their analysis and(c) Collection of Field Data, their analysis and

interpretationinterpretation

1. Data from a representative sample of natural rubber dealers.1. Data from a representative sample of natural rubber dealers.

2. Data from product manufacturers.2. Data from product manufacturers.

3. Case studies of large manufactures, dealers, and Commodity3. Case studies of large manufactures, dealers, and Commodity

ExchangesExchanges

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Importance of the StudyImportance of the Study

The manufacturing industry, which was significantly dominatedThe manufacturing industry, which was significantly dominatedby the tyre sector, has undergone some diversification, therebyby the tyre sector, has undergone some diversification, therebyimplying possible changes in consumption behavior in theimplying possible changes in consumption behavior in thenatural rubber market.natural rubber market.

While both the regulatory mechanism and the lobbying powerWhile both the regulatory mechanism and the lobbying powerof farmers and traders, were against natural rubber imports, inof farmers and traders, were against natural rubber imports, inthe pre-liberalization era, this situation has changed recently.the pre-liberalization era, this situation has changed recently.

The relationship between synthetic substitutes and naturalThe relationship between synthetic substitutes and naturalrubber has changed significantly in recent times.rubber has changed significantly in recent times.

The area under cultivation of natural rubber has grown , both inThe area under cultivation of natural rubber has grown , both interms of coverage and quantities.terms of coverage and quantities.

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Scope of the StudyScope of the Study

The study is of an all-India nature.The study is of an all-India nature.

However, the field research will beHowever, the field research will beconfined to specific areas.confined to specific areas.