On September 22, at the Seventh International Corn Industry Conference (ICIC) held in Chengdu, an official of Dalian Commodity Exchange (DCE) said that the project of the corn starch futures has been approved recently, and while steadily making preparations for the listing and trading, DCE will make innovation and improvement for the business systems of the corn futures by focusing on perfecting the delivery system, in a bid to reduce the market costs, enhance the operational efficiency and better serve the industries.
The official said that after the listing of the egg futures product in last November, the number of DCE’s agricultural futures products has reached nine, and this year DCE has continued to research the development of the agriculture-related futures products, especially making efforts in expanding the downstream products of corn. Recently the project of the corn starch futures has been approved, and DCE is steadily making preparations for the listing and trading of the product by holding discussion meetings on the contract rules, forums of spot enterprises and members, the training sessions for the spot enterprises and the surveys and inspections to the delivery warehouses, etc. The introduction of the product will help improve the system of agricultural futures products and provide more complete hedging instruments for the corn industry chain.
The official also said that according to the requirements of China Securities Regulatory Commission (CSRC) for further refining and deepening the futures products, this year DCE has vigorously made innovation and improvement for the corn futures in five aspects: first, DCE has actively implement the “3-step delivery” and the related rules were put into force on the August Contract with the deliveries for two months completed by now and the effectiveness of the new system tested; second, DCE has formulated and implemented the pilot program for expanding the business of soybean meal warehouse receipts swap with the number of the pilot enterprises increased from 2 to 9 and the relevant businesses well received by the market, and now the feasibility of implementing the program on the corn futures product is being researched; third, the business of grouping delivery of corn and the extension of the corn delivery have been researched, so as to reduce the delivery costs and expand the coverage of delivery; fourth, DCE has discussed and cancelled the procurement auction system and improved the delivery default handling mechanism; fifth, DCE has revised and improved the relevant rules and systems, further reduced the costs for market trading, facilitated the hedging and arbitrage for the enterprises and boosted the continuous briskness of the contracts.
According to experts’ estimates, China's annual capacity for corn deep processing is nearly 80 million tons, of which the starch products (including starch sugar) account for nearly 60%, and the producers have strong demand for hedging as the products are highly market-oriented with significant price fluctuations. In the future, the introduction of the futures product will undoubtedly form the new products line of corn and corn starch on the futures market in Dalian, which will be of great significance for improving the overall development and operational efficiency and deepening and expanding the functions of the corn futures market. Making further improvement and innovation of the corn delivery system will help extend and radiate the corn delivery areas from the base point of Dalian to other corn production and sales areas, and the corn transferred by rail will be included in the current delivery system, so as to further expand the coverage of the corn delivery and make the enterprises participate in the market more actively as well as improve the hedging effect.