Consider these erudite predictions in an editorial in the June 11, 2005, issue of this publication:
“Unless there are some dramatic changes, rubber processors that use natural rubber will face a shortage around 2010. A scenario of $1 a pound for NR isn't just a fantasy. Did anyone five years ago predict $60 for a barrel of oil?”
The finger was pointed at rising demand in China and India for NR, and the lack of planting of new Hevea rubber trees. That's what the experts—and we, in our editorial—were preaching.
So where does it stand today? As always, predicting the future can be awfully dicey.
Yes, NR supply is down, significantly in some of the world's largest Hevea rubber-producing nations. But there is no lineup of companies worried about getting enough NR. They just haven't needed it, thanks to the worldwide recession.
The members of the Association of Natural Rubber Producing Countries curbed exports for 10 months, but industry watchers don't believe that had much of an effect on pricing. As one said, the NR market isn't as easy to manipulate as it once was.
And what about the widespread belief back in 2005 that a lack of Hevea planting would cause supply to dwindle? At the time that was made, it was true, smallholders were turning to crops that have a quicker return than rubber.
That trend reversed itself, however, and massive plantings have taken place throughout the NR world. Now the prediction is the world will be awash in Hevea in the future, a 50-percent increase in output by 2020.
That means prices for this vital material should fall, at least in theory. In practice, maybe not.
NR prices over $1 today are the norm, not a fantasy. The cost of Hevea, like many other commodities, tracks the price of oil, the big boy of commodities that affects just about all aspects of business and society. Oil at $60 a barrel is the low price in a bad recession—today it's in the $80 range, and the economic downturn is just starting to end.
Maybe oil won't match the $147 it topped out at in July 2008, but the price is sure to rise as the world uses up its supply. As oil prices go, so will NR's. That is, unless something unanticipated happens—which is about the only thing that can be predicted with some certainty.