Returns in commercial trading depend on several factors. What is particularly important is the question of how often, say within one year, trade transactions can be transacted with the available capital. This varies depending on the product and distance between the exporting and importing countries.
In the rubber trade between Africa and Latin America or Asia, the average transaction time is eight to twelve weeks. The trade capital can thus be used four to six times per year.
The trade margins are the second key factor which affect the operative gross profit in commercial trading. In general, the higher the processing stage of the raw material, the lower the margin. In the case of TSR rubber standard products, which are sold after factory processing as industrial intermediate goods, the margin is between two and six percent, but in the case of unprocessed raw rubber it is between six and twelve percent.
If the trade margin is multiplied by the number of annual transactions, annual gross profits result for the trade with raw rubber of 24 to 72 percent, or for rubber standard products an annual gross margin of 8 to 36 percent. TIMBERFARM GloReg expects an annual gross yield of between 35 and 40 percent given current trading activities.