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Dalian Commodity Exchange (DCE) issued a notice on adjusting the premiums and discounts of the delivery warehouses for the corn futures on January 15, in order to adapt to the changes in the spot market and further strengthen the functions of price discovery and hedging for the futures market. Specifically, the premium and discount for the designated delivery warehouse Yingkou Port Group Corp. against the benchmark designated delivery warehouse will be adjusted to RMB 0 / ton, with that for Jinzhou Port Co., Ltd. adjusted to RMB -5 / ton and that for Liaoning Jinzhou Jinyang State Grain Reserves Depot (Transit) adjusted to RMB -15 / ton. The above-mentioned adjustments shall come into effect as of April 1, 2017. The adjustments will be implemented on the contracts that are yet to be traded, and will not affect the normal operation of the existing corn futures contracts.
According to an official of the agricultural products business division of DCE, in recent years significant changes have taken place in the spot market, and the premiums and discounts for the original sites have been unable to meet the requirements of new situations. Mainly based on the differences of the spot prices in the delivery areas of Dalian, Jinzhou and Yingkou, the adjustments eliminate the impact of the quality differences of the corn stored at the ports in the three areas on the prices, and reflect the freight, the port surcharge, the clients’ preference in container gate-in and various other factors. For the adjustments, the opinions have been fully solicited in the market. The opinions of the main industrial clients have been solicited through forums and other means with those of the whole market solicited through all the members.
A market participant said that with the adjustments, the premiums and discounts for different sites will more adapt to the price differences in the spot market, basically achieving no difference in earnings for the delivery in the three areas. The clients can select the nearer futures delivery warehouses for delivery according to their habits in spot logistics. The adjustments will provide more convenience for the clients in delivery of the corn futures.
