Dalian Commodity Exchange Continues to Advance Innovative Business in Agricultural Product Markets
At the “8th International Corn Industry Conference” held in Wuhan on September 17, the head of the Agricultural Products Department of the Dalian Commodity Exchange (abbreviated as “DCE”) stated that in recent years the scale of DCE's agricultural product futures market has grown steadily, and a relatively complete risk-hedging chain for corn industry varieties has been formed. At the same time, DCE has actively promoted institutional innovation, and through the implementation of new systems and new measures such as “warehouse receipt swapping,” together with large enterprise groups, it has provided more delivery convenience for small, medium and micro enterprises in the industrial chain, with remarkable market results. In the future, DCE will, through promoting more institutional innovations such as the “group-style delivery system,” stay close to the realities of the spot market and to industry needs, and enhance the futures market's ability to serve the real economy.
According to the introduction, DCE currently lists 10 agricultural product futures varieties, forming four major industrial chain variety sectors: corn, oils and oilseeds, poultry and livestock, and timber. In recent years, the scale of Dalian's agricultural product futures market has continued to expand. In the first 8 months of 2015, agricultural product trading volume reached 370 million lots (single-side, the same below), a year-on-year increase of 26%.
With the listing and growing maturity of egg and corn starch futures, the risk-hedging chain of the corn variety industry has become more complete. Corn and corn starch futures constitute a relatively complete risk-hedging system for the corn deep-processing industrial chain, and leading enterprises in corn trade, feed and deep processing all use the two varieties for risk avoidance. Corn, soybean meal and egg futures have in turn formed a risk-hedging system for the egg industrial chain, broadening the depth and breadth of futures services to the real economy.
In recent years, DCE has continued to promote institutional innovation, continuously improving its ability and level of service to industry and the real economy, with remarkable increases in market efficiency. A relatively typical example is that, together with large enterprise groups, it has helped small, medium and micro enterprises by launching the “warehouse receipt swapping” business based on group operations, greatly facilitating the participation of small, medium and micro enterprises in the middle and lower reaches of the industrial chain in futures delivery, and further promoting the seamless connection between the futures and spot markets.
In addition, after the “three-step delivery method” was implemented, it effectively alleviated the difficulty of taking delivery in different locations and reduced the uncertainty of enterprise delivery locations and delivery costs. Since the implementation of this system, customers have actively participated, the matching effect has been good, and about 90% of customer intentions have been satisfied.
Regarding future institutional and rule innovations in DCE's agricultural product futures market, this responsible person stated that DCE will continue to advance institutional innovation, steadily promote the implementation of the “group-style delivery system,” provide more convenience for buyers taking delivery, and further deepen the futures market's ability and advantages in serving the real economy. According to the introduction, the “group-style delivery system” is currently the focus of DCE's delivery system innovation. Group-style delivery warehouses are divided into two types: group delivery warehouses and extended delivery warehouse areas, with the group and existing warehouses as the core respectively. DCE will implement this system according to the approach of “pilot first, then expand,” and plans to give priority to carrying out a pilot on the corn variety, so as to alleviate the problem of mismatch between the scale of the corn variety's futures and spot markets, and to solve delivery-link difficulties such as inconvenience for buyers taking delivery at the production area and for customers delivering and taking delivery for overland outbound transport.
This responsible person stated that DCE will also further align with the spot trading habits of eggs, improve egg rules, reduce delivery costs, increase deliverable volumes, and attract more real enterprises and institutional customers to participate; improve the corn starch futures delivery system to further reduce delivery costs; continue to increase delivery warehouses for soybean No. 1 in Northeast China to facilitate buyers and sellers; and promote changes in imported soybean circulation policy and revise the Soybean No. 2 contract to provide the industry with more effective risk management tools.