Covering both producing areas and sales areas and considering logistic conditions and prevention of epidemic diseases in setting egg futures delivery sites
Where will the egg futures be delivered? An official of the agricultural products business division of Dalian Commodity Exchange (DCE) said recently in an interview that considering the requirements of the egg futures product for the market pattern and delivery condition, the benchmark delivery warehouses of the egg futures are set in the production-concentrated provinces such as Henan, Hebei, Shandong and Liaoning with premiums set in delivery warehouses in the production-concentrated provinces such as Jiangsu and Hubei and the distributing regions of sales such as Beijing, Shanghai and Guangzhou and the factory delivery warehouses established at the laying hens farms in the producing centers.
The official also said that the forms of constant temperature warehouse delivery and laying hens farms factory warehouse delivery have been adopted in parallel for the egg futures. In selecting the delivery sites, four factors have been taken into account, namely, the strong price representativeness of the delivery regions, sufficient resources of constant temperature warehouses and good logistic conditions, the position as a trade and distribution center suitable for organizing delivery and sales, and some extent of dispersive ability for preventing the risks of the epidemic disease outbreaks.
According to the official, Henan, Hebei, Shandong, Liaoning, Hubei and Jiangsu Provinces are China’s main laying hens farming centers. According to statistics, the production of the six provinces accounts for about 60% of China’s total egg production with the interprovincial output reaching 85% of China’s total interprovincial trade volume of eggs, while the inflow of the eggs to Beijing, Shanghai and Guangdong Province, the three main sales regions, accounts for 46% of China’s total interprovincial trade of eggs with large wholesale markets having been formed locally, including Dayanglu and Xinfadi in Beijing, Chatou in Guangzhou and Xinli in Dongguan, and the egg supplies at all these wholesale markets have exceeded half of the total local egg supplies with strong capacity of radiating.
DCE has also taken the epidemic diseases prevention into full consideration when designing the delivery sites. While meeting the needs of the spot trading, the delivery sites of the egg futures are scattered enough in location so that when epidemics break out in one area, the delivery sites in other areas will provide adequate convenience for delivery, in a bid to minimize the impact of the epidemics such as avian influenza on the egg futures.
It is learnt that in setting the delivery sites of factory warehouses, DCE has selected the large laying hens farming enterprises and the enterprises in the pattern of company + farmers with large output and high degree of standardization as the delivery factory warehouses of the egg futures. Currently, the total registered warehouse receipts of the delivery factory warehouses may reach 6,150 tons, 246 times the position limit of the delivery month, which can fully meet the demands for delivery, and furthermore, the enterprises of the factory warehouses feature high degree of standardization, mature operation and high quality of eggs. In addition, a vast majority of enterprises with delivery factory warehouses of the egg futures have their own terminal marketing networks as well as the capacity of large-scale transportation of eggs. If the buyer receives the goods from the delivery factory warehouse, the distribution service may be provided by the warehouse on the basis of the negotiations of the buyer and the seller.
In setting the delivery sites of the egg futures, premiums have also been set respectively for the regions such as Hubei, Jiangsu, Beijing, Shanghai and Guangdong as non-benchmark delivery regions, with a premium of RMB 50 / 500 kg for the producing provinces of Hubei and Jiangsu and different premiums for the sales regions, including a premium of RMB 250 / 500 kg for Guangdong, RMB 150 / 500 kg for Shanghai and RMB 50 / 500 kg for Beijing. According to the DCE official, the Beijing and Tianjin regions in North China, the Shanghai, Zhejiang and Fujian regions in East China and the Guangdong region in South China are China’s three areas with apparent inflow of eggs. With regard to the spreads, distribution regularity can be found in the egg prices in different parts of China with stable spreads. Overall, the egg prices of the sales areas are higher than those of the producing areas and the more south-located the sales area is, the higher price.
It is learnt that as a crucial part of the design of commodity futures contracts, the setting of the delivery sites has impact on the market liquidity and especially affects the buyers’ active participation in the market, thus generating direct effect on the functioning of the futures market. On the basis of the in-depth analysis of the characteristics of the egg market and thorough survey and research of the distribution of production and sales, the prices and the features of the trade of the commodity, DCE has made this designing scheme of the delivery sites.