At the beginning of January 2021, pig futures, as China’s first animal husbandry futures variety and live delivery variety, was listed in Dachang stock exchange and has been running successfully for one year. After investigation, the reporter of Securities Daily found that during the year of operation of pig futures, pork prices were in a downward cycle as a whole. Pig futures were in parallel with the spot market, effectively helping breeding enterprises resist the risk of price fluctuation, ensuring breeding profits, and promoting the stable supply and price of China’s pig industry It has played a positive role in improving the long-term mechanism for the stable and orderly development of the pig industry.
Up to now, more than 2600 unit customers (excluding asset management and special corporate customers) in China have participated in futures trading and delivery. More than 90 breeding enterprises have applied for hedging qualification, including more than 10 listed companies such as Muyuan Foods Co.Ltd(002714) . Among the top 20 leading enterprises in pig breeding industry, 19 have submitted application materials for delivery warehouse to Dalian Commodity Exchange, and 11 have become delivery warehouse of pig futures.
cumulative turnover of 1.74 trillion yuan
The latest statistics show that as of January 7, 2022, a total of 6.1669 million transactions of pig futures have been completed, with a total turnover of 1.74 trillion yuan. Among them, 54 contracts lh2019 and lh2111 were delivered, the whole business process was successfully closed, and the relevant rules, systems and process design were comprehensively tested by the market.
The pig researcher of COFCO futures told the reporter of Securities Daily that pig futures has experienced several stages, such as listing, standard warehouse receipt registration, first delivery matching and so on. Among them, the delivery link is the most important. In the first delivery month of pig futures, there were 20 paired deliveries, including 5 handcart board deliveries and 15 warehouse receipt deliveries, involving 13 customers of 9 seller members, 10 customers of 10 buyer members and 6 delivery warehouses. On the whole, the futures price better reflects the market expectation.
After the listing of pig futures, it coincided with the downward cycle of pig spot market. The overall operation of pig futures was stable, and the trading volume and position increased steadily. It basically played the function of price discovery and hedging, and played an important role in helping the breeding industry avoid the risk of price decline.
When the spot price is high in January, the futures price shows a discount; When the spot price fell to the bottom in June and July, the futures price showed a rise, which provided good price guidance for production and consumption enterprises in the pig industry and mitigated the excessive fluctuation of spot price to a certain extent.
Therefore, although China’s pig industry is in a downward cycle, the confidence of pig breeding operators is increasing, and the development of the whole pig industry is relatively stable. This is not only the result of the active linkage of all parties in the market to jointly help maintain supply and stable price, but also thanks to the efforts made by the large commercial exchange to take many measures and ensure the stable function of pig futures. On the basis of ensuring the safe and stable operation of pig futures, Dachang exchange has met the hedging needs of various participants and promoted the healthy and stable development of pig industry by adjusting the hedging amount, designing diversified delivery services and promoting the “Dachang agricultural insurance plan”.
breeding enterprises actively participate in
The price discovery and risk aversion function of pig futures has gradually benefited all subjects of the industrial chain. Pig breeding enterprises and farmers also give positive evaluation and high affirmation to the market operation and function of pig futures, and look forward to the future development of pig futures.
Jiang Guojin, chairman of COFCO jiajiakang Food Co., Ltd., told the Securities Daily that the launch of pig futures is of great significance. The company actively participates according to its own breeding situation and avoids operational risks by selling hedging. It is a direct beneficiary of participating in pig futures trading.
Qin Jun, Secretary of the board of directors, also told reporters that the pig industry has lacked a price discovery mechanism for a long time. After the launch of pig futures, it provides a new channel for the breeding industry to manage risks and helps to promote the transformation of pricing mode in the breeding industry. Enterprises can lock the listing price in advance by means of futures hedging, warehouse receipt sales, or non-standard product trading extended from floor products. In the future, the company will gradually increase its participation and make more contributions to the sound development of the industry.
The reporter learned that many large listed companies use pig futures to avoid price risk, and a large number of small and medium-sized farmers use the pig “insurance + futures” model to avoid risk. Last year, Huaxi futures and Ping An Property Insurance launched the pig “insurance + futures” project in Butuo County, Liangshan Prefecture, using pig futures, which provided protection for 2880 pigs of 36 local pig farmers. The final compensation was about 1155000 yuan, with a compensation rate of 334%. Local farmers told reporters, “I didn\’t expect to pay us so much money, otherwise raising pigs for a year would be a loss.”
Market participants pointed out that there is a gradual process for any new variety to mature and function. Pig futures have achieved gratifying results in the past year, but it still needs a long time of intensive cultivation and careful cultivation, and it also needs the support and understanding of all sectors of society.
(source: Securities Daily)
