The Wintering Period - What Is It and What Does It Mean for Latex Glove Sales?
September 09, 2013
The wintering period may sound like the time of year that the snow birds, aka retirees from the northern United States, travel south for the winter months to escape the many inconveniences that snow can cause. The context referred to here does not relate to snow at all, but to the coldest months in places where rubber is grown. So what does the wintering period have to do with the price of latex gloves in the United States and the rest of the world?
The wintering period is an annual event that falls between February and May. During this period, which lasts approximately 4 to 6 weeks, the leaves of the rubber tree die and fall off, and new leaves are formed. Both the metabolism of the tree and latex production are substantially affected. Accordingly, rubber production is normally low during the rainy season. During the wintering period, rubber production shrinks 45 % to 60% from the peak.
These seasonal variations are important factors influencing the latex glove market. Latex glove distributors tend to restock inventories in anticipation of even higher latex prices during the wintering period. Typically, after the wintering period ends, there is a marked increase in the supply of latex.
There are, of course, many factors that affect supply and demand in the disposable latex glove market. Seasonality of the harvest, as mentioned above, is just one factor. Tsunamis, earthquakes, blight (notably the South American Leaf Blight), price speculation, pandemics, adverse weather/growing conditions, competition for farm land from other grains, etc. are exogenous factors that guide supply and demand and which ultimately determine disposable glove prices. The vast majority of natural rubber (NR) goes towards the production of tires and tire manufacturers tend to get the raw materials before glove manufacturers as there is limited supply. Therefore, it is hard to predict the price effect on latex gloves.
The three largest rubber producing countries are Thailand, Indonesia, and Malaysia, which account for roughly 72% of the world's NR exports. Generally speaking, the major areas affected by wintering lie in a tropical belt between 20 degrees N and 10 degrees S.
It mostly affects supply, but supply, in turn, impacts demand. Since the factories always seem to run at full capacity, any glitch causes suppliers to rush out and buy as much inventory as they can in order to avoid being stocked-out.
In summary, supply of NR decreases annually during the wintering period, so glove manufacturers try to account for this. But any unanticipated increase in demand will reduce inventory levels and will likely lead to price hikes in the end product, latex gloves.