Futures trading could curb rising rubber price : NMCE CEO

MUMBAI (Commodity Online): National Multi-Commodity Exchange of India Managing Director and CEO Anil Mishra said strengthening up commodity futures can be a fine treatment for curbing the rising prices of commodities  rubber.

The rising cost of rubber has been a concern for the buyers and industries dependent on rubber.

Stressing the effective use of commodity futures market to control rubber prices, Mishra said commodity futures market had lots of types of stakeholders with different objectives; therefore they take different opposite and diverse decisions and give opportunity to the users to be able to buy at cheaper cost.

Mishra explained that lesser carry-over inventory, not  supply, extended rain and vagaries of weather in most producing countries have kept the rubber cost high globally and there is no cost drop in sight. The challenge for rubber user-industry is how to manage the cost of rubber the key raw material.

Mishra further detailed that the regulator, Forward Markets Commission (FMC), had expertise to make use of various risk management tools such as daily cost limit, preliminary margin, additional margin, special margin, and mark-to-market, position limits and penalties and makes use of all these tools effectively as was appropriately necessary. It monitors the trading live on line.

The global shortage of rubber has affected worst in China and India; it is the tyre industry which suffers most. Tyre production in India in the first-half of this financial year (April-September 2010-11) increased 28 per cent while exports registered an increase of 18 per cent.

According to the Automotive Tyre Manufacturers Association (ATMA), production increased in all tyre segments while growth was negative in exports of truck/bus tyres, light commercial vehicle and tractor tyres.

(Source: http://www.commodityonline.com/news/Futures-trading-could-curb-rising-rubber-price--NMCE-CEO-35216-3-1.html)