TGE Chairman Takao Morisane said, “Last summer the Exchange published a report on a feasibility study of rice futures trading and has held numerous seminars across the country in order to deepen the understanding on rice futures trading for a wider range of people involved in rice business. In June 2005, immediately following the release of the reports on contract designs of rice futures, the General Meeting of Members unanimously passed the amendments to the Exchange regulations for the pilot listing of rice futures. However, taking into account the opinions on the prematurity of the launch, upon my own responsibility, I have been withholding this application until the timing is correct.
At the same time, the Foodstuffs Panel of Food Committee of Food, Agriculture and Rural Area Policy Council of MAFF has been discussing the launch of rice futures, conducting hearings of persons involved in the rice industry (rice producers, its cooperative organizations, rice wholesalers, food-service industry for restaurant and home meal replacement, etc.). I took the opinion of the majority, except for the representatives of the farmers’ organization, was that a rice futures market should commence at the earliest date as possible as the rice industry is confronted with the problem of risks from price fluctuation as can be seen in the Zennoh Akita scandal. The government lifted control on rice distribution since April 2004 and has determined Management and Income Stabilization Measures at the end of October 2005.
In consideration of the progress of the preparatory work including the development of the new trading platform for rice futures and upon the strong request by our exchange members, I have decided that the Exchange should not postpone the submission of approval any longer. Therefore the Exchange submitted the application today to the Minister of Agriculture, Forestry and Fisheries of Japan. Upon approval from the Minister, the Exchange is planning to start trading rice futures from June next year commencing with the October 2006 contract month for the 2006 crop year. This is the result of taking into account of the timing of the rice production adjustment for the 2006 crop year.
From the viewpoint of further deepening our relationship with those engaged in the rice business, TGE will assist those commercials in gaining better understanding of the functions of futures markets and how to use rice futures trading so that they may manage price risks by hedging. We hope for your understanding on this initiative.”
