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Over the past year, as for the oil and oilseed sector, DCE has enriched tools of futures and options and connected domestic and international markets. The oil and oilseed sector, including No. 1 soybean, No. 2 soybean, soybean meal, soybean oil and RBD palm olein, is one of the most influential sectors of DCE. DCE realized the full coverage of futures and options tools of oil and oilseed sector, and opened up the entire industrial chain. DCE further improved the global oil and oilseed market system, facilitating global oil and oilseed enterprises to carry out cross-market operation and risk management. This has effectively promoted the smooth flow of cross-border trade business and contributed to the stability of industrial chain and supply chain.
In terms of market size, the trading volume of DCE RBD palm olein futures reached 241 million lots in 2022, up 6.6% year on year, ranking second among agricultural futures and options in the world. The trading volume of RBD palm olein options reached 26.71 million lots, which equals to 11% of the trading volume of the underlying futures. The market liquidity has improved steadily. Corporate clients have become the major participants in the market.
With regard to the functioning of the market, the international trade policies of crude oil and palm oil changed greatly last year. However, the RBD palm olein futures market of DCE operated stably, with a price correlation between the futures and spots close to 0.99; and a price correlation between the RBD palm olein futures of DCE and crude palm oil futures of BMD close to 0.98. The hedging efficiency was recorded to be 99%.
The futures and spots are closely integrated with domestic and overseas markets intimately connected. So far, more than 70% of spot trade in palm oil in Chinese mainland has adopted the futures price of DCE as the pricing benchmark. The basis trading based on futures price has become the mainstream trading pattern for many enterprises. Some domestic and overseas enterprises have also started to trade between the markets of DCE and BMD for hedging. Therefore, the market is able to provide better services for the real economy and industries.
Going forward, DCE will continue to be market-oriented, law-based, and internationalized, focus on the three priorities of innovating products, driving business with technology, and establishing ecosystems, to deepen the reform and opening-up of the market, to bring the functions of the futures market into full play, and to better serve global investors.
