Empirical Study On Relations Between Futures Contract Price And Spot Price Of Rubber

China is the largest importer and consumer of natural rubber, hence the fluctuation of spot price has a great impact on the chemical industry chain associated with rubber. With its two fundamental functions– hedging and price discovery– the futures market helps the producers and traders within the chemical industry to counteract the price risk induced by fluctuations of price in the commodity market, which implies great economic values to concerned parties.This dissertation collects all 20 futures contracts price from 2004 to 2006, and all spot price of the Hainan rubber commoditiy market within the three years; studies the realization of the hedging function of the futures market by analyzing the correlation ratio between futures contracts price and spot price and hedging efficiency of the futures contracts; discusses the realization of the price discovery function of the futures market by studing the cointegration and granger causality relations between the two prices; also probes the impact on hedging efficiency of regular changes of transaction volume within the transaction period of each futures contract.It is found out that the rubber futures market made some progress within the recent 3 years, with transaction volumes of consecutive contracts magnified and the hedging function more fully reallized. But it is also found out that the rubber futures market does not do well with price discovery, with the granger causality relations between the two prices ambiguous, especially spot price's causality effect on futures contracts price. The results also indicate thatpresently the regular changes of transaction volume of each contract do not impact the final hedging result.