Determinants of Natural Rubber Price Instability for Four Major Producing Countries

Recently, price instability of natural rubber (NR) in the world market has affected the NR economy severely. It is believed that NR price can no longer be explained solely by the fundamental factors supply-demand, but it is largely driven by external factors. Therefore, this study aimed to explore the determinants of NR prices in 4 major NR producing countries namely Thailand, Indonesia, Malaysia and Vietnam. Annual data from 2008 to 2017 was collected and panel data analysis was performed. Results of Hausman Test suggested that Fixed Effect Model (FEM) was preferable than Random Effect Model (REM) in the study. Results indicated that NR production, consumption, Shanghai NR price, crude oil price and synthetic rubber (SR) price were statistically significant. This study could contribute to government policy implementation in NR producing countries to ensure the stability of NR production and price which will benefit the smallholders and countries’ economic growth.