During the decade since 2006, Dalian Commodity Exchange (DCE) has innovated in the futures and improved the product line of oils and oil seeds. At the same time, by maintaining the futures contracts and innovating in and adjusting the systems, DCE has continued to improve the market mechanism and improved the efficiency of the market operation. In this way DCE has further enhanced the capacity and opened new space for serving the industries.
DCE has always adhered to the orientation toward serving the industries and the real economy. Based on the spot market and changes in the industrial development patterns, DCE has continued to improve the futures contracts, so as to make them the internal impetus for the sustainable development of the market. It is also the principle of the DCE in maintaining and improving the listed contracts. The rapid development and changes in the oils and oil seeds industry have also created new requirements for revising and improving the contracts. In nearly a decade, by revising and improving the contract specifications, DCE has made the contracts of oils and oil seeds adaptable to the spot market and the industrial pattern, satisfying the demand of the enterprises.
In 2006, on the basis of adequate discussions and in-depth research, DCE modified the delivery standard for soybean meal futures. At that time, with continuous progress in production technologies, oil mills adjusted their soybean meal production methods by gradually adopting the methodology of peeling, steaming and boiling, the national standards for soybean meal saw relevant indicators adjusted on the basis of the changes in the market. After the implementation of the new national standards, some new changes took place in the spot market of soybean meal. Then, there were some differences between the futures contracts and the spot trading contracts of soybean meal in the quality standards for fiber, moisture, urea enzyme activity and other indicators.
In view of this, DCE has made targeted adjustments to delivery standards. The moisture level was changed from less than or equal to 12.5% to less than or equal to 13%. The crude fiber was changed from less than 6% to less than or equal to 7%. The crude ash was changed from less than 7% to less than or equal to 7%. The urea enzyme activity was changed from greater than or equal to 0.02 mg / (min.g) and less than or equal to 0.35 mg / (min.g) to less than or equal to 0.3 mg (min.g). The revised soybean meal futures contract has been more adaptable to the spot trading contracts. They have provided more realistic price signals for the production and operation of the oils and feed enterprises, facilitating the participation of the spot enterprises in hedging.
DCE has always adhered to the orientation toward serving the industries and the real economy. Based on the spot market and changes in the industrial development patterns, DCE has continued to improve the futures contracts, so as to make them the internal impetus for the sustainable development of the market. It is also the principle of the DCE in maintaining and improving the listed contracts. The rapid development and changes in the oils and oil seeds industry have also created new requirements for revising and improving the contracts. In nearly a decade, by revising and improving the contract specifications, DCE has made the contracts of oils and oil seeds adaptable to the spot market and the industrial pattern, satisfying the demand of the enterprises.
In 2006, on the basis of adequate discussions and in-depth research, DCE modified the delivery standard for soybean meal futures. At that time, with continuous progress in production technologies, oil mills adjusted their soybean meal production methods by gradually adopting the methodology of peeling, steaming and boiling, the national standards for soybean meal saw relevant indicators adjusted on the basis of the changes in the market. After the implementation of the new national standards, some new changes took place in the spot market of soybean meal. Then, there were some differences between the futures contracts and the spot trading contracts of soybean meal in the quality standards for fiber, moisture, urea enzyme activity and other indicators.
In view of this, DCE has made targeted adjustments to delivery standards. The moisture level was changed from less than or equal to 12.5% to less than or equal to 13%. The crude fiber was changed from less than 6% to less than or equal to 7%. The crude ash was changed from less than 7% to less than or equal to 7%. The urea enzyme activity was changed from greater than or equal to 0.02 mg / (min.g) and less than or equal to 0.35 mg / (min.g) to less than or equal to 0.3 mg (min.g). The revised soybean meal futures contract has been more adaptable to the spot trading contracts. They have provided more realistic price signals for the production and operation of the oils and feed enterprises, facilitating the participation of the spot enterprises in hedging.
In 2012, responding to the changes in the spot market, DCE revised and improved the RBD Palm Olein, No. 1 Soybeans and other contracts successively on the basis of in-depth survey and research. In terms of RBD Palm Olein futures, for example, significant changes took place in the spot trade of palm oil after the new national standards for palm oil was implemented in October 2009. Gaps were found between acid value, one of the core indicators for delivery products of palm oil futures, as well as some other indicators and the actual demand in the spot market. After thorough survey and research, DCE revised the related quality requirements and tests on the basis of the changes in the new national standards. At the same time, the related contents of acid value and tag were improved to adapt to the spot market. With regard to the soybean futures, some deviations were found between the delivery quality standards of No. 1 Soybeans and the spot trade and circulation after some changes happened in the domestic soybean market at that time. The delivery quality standards failed to completely meet the requirements of the spot market, restricting the full market functioning to some extent. In accordance with the new trends on the spot market, DCE revised and improved the original contracts and rules in delivery substitutes, setting of related premiums and discounts and other aspects. In addition, DCE introduced delivery with bulk grain (without packaging). The futures operation has shown that the revised and improved delivery quality standards of the contracts have adapted to the new national standards and the new market situations. They have enabled the enterprises to better use the futures market in risk management, reduced the uncertainties in the market and further improved the liquidity of the futures.
In the development of market operation, DCE launched the pilot of warehouse receipts switch in December 2013, strengthening the service for micro, small and medium-sized enterprises while effectively supporting all industrial enterprises. It was another innovative effort of DCE in systems and service means after the factory warehouse delivery system was introduced in the domestic futures market for the first time in the futures of soybean meal.
In the development of market operation, DCE launched the pilot of warehouse receipts switch in December 2013, strengthening the service for micro, small and medium-sized enterprises while effectively supporting all industrial enterprises. It was another innovative effort of DCE in systems and service means after the factory warehouse delivery system was introduced in the domestic futures market for the first time in the futures of soybean meal.
The warehouse receipts switch business means that after buying in the warehouse receipts of the delivery warehouse of a business group through delivery, the client can, by signing the switch agreement with the group, pick up goods in other locations or have the group register for them the warehouse receipts of other delivery warehouses in the group. DCE piloted the intra-group factory warehouse receipts switch business on the soybean meal futures in December 2013. Then DCE launched another two rounds of pilot in July and November 2014, when the pilot for the soybean meal futures was expanded; the switch business for the Soybean Oil and RBD Palm Olein launched in November realized the warehouse receipts switch between different delivery grades for Soybean Oil. It also started to allow switch with warehouse receipts for the three products, rather than factory warehouse receipts only. In September this year, DCE and some groups jointly launched a new round of warehouse receipts switch for Soybean Meal, Soybean Oil and RBD Palm Olein futures. More participants have been added. New application dates for warehouse receipts switch in the delivery months have been increased. The charges for the switch business have been reduced by one third. The regular publication of spot price quotations has been realized.
According to data, since the implementation of the system, the proportion of feed enterprises in buying clients in delivery has been increased dramatically. The proportions of the delivery volumes of buying feed enterprises for 1401, 1403 and 1405 Contracts reached 64%, 71% and 100%, respectively. With the business scope of the “warehouse receipts switch”expanded, the convergence of the futures and spot prices at maturity has been significantly improved. For example, the forward sales basis for soybean meal has been sharply reduced, as according to the forward sales basis contracts in September 2015, the average basis has dropped to lower than RMB 100 / ton from about RMB 200 / ton in 2013, and the level is relatively stable.
