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At the Seventh International Corn Industry Conference (ICIC) held in Chengdu on September 22, an official of the agricultural product business department of Dalian Commodity Exchange (DCE) said in her keynote speech that the egg futures have run smoothly since the listing, and currently the product line of the feed and breeding chain including the corn, soybean meal and egg futures has been formed.
The official said that as the first fresh agricultural product on China's futures market, the egg futures have drawn much attention since the listing. Since the listing, the egg futures have run smoothly with good performance in market liquidity. According to the price operation, the egg futures have shown high correlation of the futures and spot prices with that of 1405 Contract at 0.9 and that of 1409 Contract at 0.85; the price fluctuations of the egg futures have reflected the changes on the spot market on the whole, and especially the prices of the contracts near the delivery month are very close to the prices of spot market.
In terms of the function of hedging, the egg futures have provided the egg farming enterprises with an effective instrument for risk management with the initial functioning in helping the farming enterprises become larger and stronger. In addition, after the listing of the egg futures, the information level of the industry has been significantly improved with the price transparency steadily enhanced, which has boosted the industrial standardization to some extent.
She also said that in order to further foster the egg futures product, in the future DCE will make the following efforts with regard to the livestock products: First, DCE will continue the research and development of the products of the livestock sector and constantly enrich the related products; Second, DCE will improve the rules and systems of the egg futures contracts by further reflecting the spot goods, including researching the innovation of the delivery modes of the egg futures in accordance with the characteristics of the egg farming industry, constantly improving and developing the delivery warehouses system with the factory warehouses in the majority so as to reduce the delivery costs, and perfecting and expanding the delivery distribution and exploring the new ways of adequate futures-spot integration so as to better serve the egg farming and egg products businesses.
With respect to the products of corn and soybean meal on the farming industry chain, the official said that in the future the corn futures will still be one of the agricultural futures products with the best prospect for development. DCE will continue to adjust the rules for the corn futures contracts, strengthen the service for the industry and the “San Nong (agriculture, farmers and rural areas), develop the related products on the corn downstream industry chain, and constantly improve the delivery system so as to tap the huge potentials; the soybean meal futures have become an important instrument for the risk management of the enterprises, and in the future DCE will, on the basis of expanding the scope of soybean meal warehouse receipts swap, further explore and research the establishment of the platform for trading of warehouse receipts, research the introduction of soybean meal options trading and the soybean meal night trading, strengthen the guiding role of the market in resources allocation, meet the diversified demands of the clients for risk management, and further promote the integration of the soybean meal futures into the international market.
She said that along with the enriched products, improved systems and deepened market functioning, the product line of feed and farming chain including the corn, soybean meal and egg futures is bound to become a powerful instrument for the related industrial clients to manage the risks. In the future, with the development and listing of the corn starch futures product, the futures market in Dalian will also see the product line of corn industry chain, which will achieve overlap and mutual promotion with the existing products of the farming chain and provide hedging for the businesses of more industries in the market.
