The
China
Securities Regulatory Commission (CSRC) announced Tuesday that
it had approved the application of
Dalian Commodity
Exchange to launch corn futures. The CSRC did not provide a
date for the start of trading.
This is the first food futures product approved by the Chinese
authorities since 1998, when an industry cleanup led to the
cancellation of many futures products.
A spokesman with the Dalian Commodity Exchange said Tuesday that
the exchange had prepared contracts, trading rules and technology
and could guarantee stable operation of the system. Trading will
begin "as soon as possible," according to the spokesman. The
exchange has been preparing for corn futures for more than five
years.
Corn output in China averages 120 million tons annually,
accounting for about one-third of total grain output.
China is the world's second biggest corn consumer. As a major
raw material for feed and industrial processing, corn has also
become a lifeline for more than 500 million peasants in China,
according to a researcher with the Dalian Commodity Exchange.
Corn supply and demand and price movements have a major impact
on the agriculture sector and the national economy.
The trade of corn futures in China will enhance the nation's
position in determining corn prices in international markets. The
price-discovering function of the market will also help promote
sound economic development and the overall reform of the foodstuff
distribution system in China.
Corn futures trends should assist farmers in adjusting their
planting plans according to market supply and demand, and to hedge
price fluctuation risks.
Corn futures are the third new futures product approved by the
CSRC this year, following the approval of fuel oil futures in the
Shanghai Futures Exchange in April and cotton futures in the
Zhengzhou Commodity Exchange in June.
Cotton futures are already being traded in Zhengzhou, and fuel
oil futures trading is scheduled to start next week in
Shanghai.
Analysts say that the fact that each of the three futures
exchanges is able to launch one new product this year is a
breakthrough in the futures industry.
In the late 1990s, a slew of price-rigging scandals caused
authorities to clamp down on the futures industry, closing down
many exchanges and trading products. By the end of the cleanup,
only about a dozen futures products survived in the three
exchanges.
Since last year the industry has been recovering, with a record
turnover of 10.8 trillion yuan (US$1.3 trillion) for 2003 and a
staggering 8.5 trillion yuan (US$1.0 trillion) turnover in the
first half of this year.
(China Daily August 18, 2004)
