Thailand Advantage in Natural Rubber Production

Technologies related to natural rubber production are high latex rubber strain, anti-plague rubber. High latex rubber strain leads Thai to No.1 natural rubber producer even though; Thai rubber planting area is only 1.43 Hectare.

However, other technologies are not so important because tapping process and latex transformation do not use high technology.

Rubber Trading

Thai rubber trading has almost changed since the beginning of rubber trading in Southeast Asia. Most rubber farmers own small land. The rubber farmers must collect their small amount productivity before vending to middleman or rubber exporter. Then Thai rubber production is ribbed smoked rubber sheet more than other kind of rubber. Many smoke rubber factories have directly exported their products to oversea customers.

However, the important Thai rubber customers are the United States, Japan. and both customers need cubic rubber shape (weighted around 111.11 kilograms) which can be carried by forklift. Then the exporters must press ribbed smoked rubber sheets to cubic shape.

Why AFET commences trading RSS3

Most Thai rubber production is RSS3 which is easily transport, storage and its standard is globally accepted. AFET accepted "International Standards of Quality and Packing for Natural Rubber Grades" (IRQPC) as our RSS3 standard for natural rubber contract specification. This standard is widely used in domestic and international rubber trading community.

RSS3 can be used as hedging tool to other kinds of rubber. AFET do not choose technically specified rubber (TSR) to commence trading because rubber farmers and cooperatives are unable to produce TSR. Once, all participants can use futures exchange as hedging tool.

AFET with risk management on ribbed smoked rubber sheets No.3

Rubber futures price is important to rubber farmers, processors, exporters. All groups use futures price or price discovery as information to direct their businesses or to manage their risk.

In addition, exporters can use futures exchange as hedging tools to manage their risk. They can buy futures rubber contract and sell futures rubber contract before the first delivery notice day called "offset", then the exporters take profit or loss from contract price difference. If they buy high and sell higher, they will gain from buying futures contract. In contrast, they buy high and sell low, they will lose from buying futures contract.

In cash market, exporters can buy or sell rubber in which they may take profit or lose as well. Fortunately, they gain in futures exchange but they lose in cash market. If the gain covers their losses, they will take profit.