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On November 4, Dalian commodity exchange (DCE) issued the “Notice on Carrying out Pilot for Intra-group Warehouse Receipts Swap for Soybean Oil and Palm Oil” (the Notice for short) to launch the warehouse receipts swap pilot for soybean oil and palm oil, and so far, the pilot for the warehouse receipts swap starting from the soybean meal futures has been expanded to three futures products.
According to the notice, Sinograin Oils Corporation, Yihai Kerry Investment Co., Ltd. and Tianjin Julong Group, the pilot enterprises, will provide the clients with the pilot business of warehouse receipts swap for soybean oil and palm oil as required with the validity period from the date of the publication of the Notice to May 31, 2015.
The Notice makes it clear that the clients, who have bought the standard warehouse receipts of soybean oil or palm oil of the delivery warehouses under the pilot groups through the current delivery (excluding exchange for physicals), can apply for taking the spot goods at the relevant swap warehouses in the pilot group announced in the Notice (“warehouse receipts for spot goods” for short) or swapping the receipts for the receipts of other related delivery warehouses in the pilot group (“warehouse receipts for warehouse receipts” for short). For the product of Soybean Oil, the “warehouse receipts for warehouse receipts” and the “warehouse receipts for spot goods” can be applied. In the “warehouse receipts for spot goods”, the warehouse receipts can be swapped for the crude soybean oil or Grade 1 soybean oil meeting DCE’s requirements for the delivery quality standards for the soybean oil futures product, and the clients or non-futures-company members, who apply for the swap for Grade 1 soybean oil, should pay the swap warehouses the refining fees of RMB 250 / ton. For the product of RBD Palm Olein, only “warehouse receipts for spot goods” can be applied, and the substitutes should meet DCE’s requirements for the delivery quality standards for the RBD Palm Olein futures product. The volume of a client’s application for the swap should not exceed the volume of the standard warehouse receipts of the delivery (factory) warehouses in the group bought through the current delivery; for each futures product, the maximum swap volume of a single contract for a single client should not exceed 1,000 tons, and the swap-in and swap-out volumes for a single swap warehouse on a single futures contract should not exceed 3,000 tons respectively; the swap fee includes the four parts of the futures premiums and discounts, the difference from the spot price in the swap, the costs for the adjustment of production plan for the warehouse of the swap and the price difference for the quality of the goods in the swap; the swap process is the same as that for the soybean meal.
In comparison with the swap of the soybean meal, in the swap designs for the soybean oil and palm oil, DCE has made the breakthrough in the quality swap design for the warehouse receipts swap for the product of the soybean oil, and more warehouses will provide the swap service. The Grade 1 oil is common in the spot trade of soybean oil, and in adaptation to the features of the spot trade, DCE has made innovation in the swap model to meet the diversified demands of the clients by introducing the swap for the Grade 1 oil that can directly enter the market circulation in addition to the crude soybean oil meeting the requirements for the delivery quality standards of the soybean oil futures. Currently, China’s spot trade of soybean oil and palm oil has formed the pattern of the two major market players of the enterprises integrating processing and trade and the pure trade-oriented enterprises, and both the two kinds of enterprises have some capacity for the swap and can meet the different demands for swap. According to the feature of the pattern, in the pilot for the warehouse receipts swap business for soybean oil and palm oil, there are factory warehouses and will be warehouses offering the swap service, thus better facilitating the participation of all kinds of market participants such as the squeezing enterprises and traders in the futures market.
Market participants said that the swap business for soybean oil and palm oil is of great significance to the agricultural futures market. Affected by the logistics, supply and demand and other factors, there are regional segments in the spot markets of soybean oil and palm oil, and the small and medium-sized clients in the regional markets are not familiar with the outside markets and lack capability in handling the goods from other regions, thus having some impact on the enthusiasm of the clients in participating in the futures market. The swap business for the soybean oil and palm oil futures provides both the buyers and sellers with the mechanism of further negotiation after the delivery, facilitating the settlement of the problems for the buyers such as the scattered warehouse receipts and receipt of goods in other regions, better meeting the demands of both buyers and sellers, facilitating the participation of the clients in the futures market and improving the capacity of the soybean oil and palm oil futures for serving the industries.
DCE launched the pilot for the intra-group factory warehouse receipts swap of the soybean meal on July 30, 2014, and participating in the soybean meal warehouse receipts swap were 38 factories under or under the management of 9 enterprises and 16 non-soybean meal delivery factory warehouses with the application of 16 pilot groups. Since the introduction of the swap pilot, smooth progress has been made in all the businesses, solving to some extent the problem of uncertain delivery sites in the futures delivery and significantly improving the narrowing basis of the soybean meal, with the feed enterprises more active in participating in the delivery of soybean meal. The warehouse receipts swap has become an innovative effort of DCE in refining the listed products.
