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To facilitate futures delivery and further improve the quality of market services, Dalian Commodity Exchange (DCE) issued a notice on December 23, announcing that it has revised the “Measures of Dalian Commodity Exchange for Management of Designated Delivery Warehouses” and the “Detailed Rules of Dalian Commodity Exchange for Delivery”, allowing the designated delivery warehouses for the corn futures to set extended warehouse areas. The first pilot of the designated delivery warehouses is Yingkou Port, and Liaoning Yihai Kerry Tereos Starch Technology Co., Ltd. and Dehui Jinxin Grain and Oils Purchasing and Storage Co., Ltd. located inTieling City, Liaoning Province and Dehui City, Jilin Province respectively are planned to be selected as the extended warehouse areas. The revised rules will come into effect starting from the C1701 Contract.
The initiative to allow the designated delivery warehouses of the corn futures to set up the extended warehouse areas requires the revision to related rules, mainly including: first, the rules have made it clear that with the approval of DCE, the designated delivery warehouses of the corn futures can set up the extended warehouse areas. Second, according to the rules, regarding the designated delivery warehouses with extended warehouse areas, the owners of the goods can choose from the main warehouse areas or the extended warehouse areas to put in the goods. If the owner of the goods chooses the extended warehouse areas, the premiums and discounts shall be determined with the negotiation of the owner of the designated delivery warehouse. When the designated delivery warehouse applies for the registration of the standard warehouse receipts for the corn to be put into the extended warehouse areas, it should provide performance bond, cash deposits or other guarantee means recognized by DCE. Third, the rules stipulate that for the goods stored in extended warehouse areas, the owner can choose to pick up the goods at the main warehouse areas or the extended warehouse areas. If the owner chooses to pick up the goods at the extended warehouse areas, the premiums and discounts shall be determined with the negotiation of the owner of the designated delivery warehouse. If the owner chooses to pick up the goods at the extended warehouse areas, as delivering the corn stored in the extended warehouse areas from the main warehouse areas will extend the delivery time for the goods, the time limit and the relevant compensation and punitive measures have been set for the designated delivery warehouse to transport the goods from the extended warehouse areas to the main warehouse areas. The rules also make it clear that DCE will manage the extended warehouse areas with reference to the relevant rules for designated delivery warehouses.
In the ten years since the listing of the corn futures, with the changing market structure, the problems of tight storage capacity at ports and inadequate coverage of delivery areas have been highlighted. At present, the delivery warehouses for corn are mainly set at the ports inLiaoning Province and the surrounding areas, which has caused inconvenience for the relevant enterprises in the main producing areas of corn in Northeast China to participate in the delivery of futures. Local enterprises have strong demand for setting the warehouses.
An official of the agricultural products business division of DCE said that in accordance with the changes on the market, after fully listening to the opinions and making surveys in the market, DCE has allowed the qualified designated delivery warehouses to set remote extended warehouse areas in the producing areas in Jilin and Liaoning, so as to increase the storage capacity and solve the above-mentioned problems. If the owner of the goods chooses the extended warehouse areas to put in the goods, the premiums and discounts shall be determined with the negotiation of the owner of the delivery warehouse. At the same time, in order to further prevent the risks, the DCE will perform examination of the application materials, supervision and routine inspections for the extended warehouse areas, and implement the performance bond, cash deposits and other guarantee measures.
