New soymeal futures hedge is launched
First domestic commodities options issued in the mainland
Dalian Commodity Exchange launched new soymeal futures options on Friday — the first commodity options in China — offering one more hedging tool for investors, as well as soybean processing firms.
The exchange is also considering launching futures options for more commodities, such as corn and soybeans, according to Wang Fenghai, managing director of the exchange.
“It is an historical move for China’s commodity derivatives market system, expanding from just futures to options,” Fang Xinghai, vicechairman of the China Securities Regulatory Commission, said at the launching ceremony held in Dalian, Northeast China’s Liaoning province.
Sugar futures options will also be listed soon, said Fang, adding that the CSRC will approve more options for commodity futures to better serve the real economy.
According to Chen Anping, deputy director of the trading department of the DCE, soymeal — a part of the soybean industry chain — is a mature and active commodity in China’s futures market.
“The trading volume of soymeal futures at DCE ranked the world’s top for five consecutive years in global agricultural commodity futures. DCE has become a pricing center for the domestic soymeal futures market,” Chen said.
Soymeal is a byproduct of soybean oil making. It is widely used in animal feed and animal nutrition products.
Ninety percent of China’s soybean oil makers with a daily capacity of more 1,000 metric tons have been trading soybean futures, according to Chen.
It is an historical move for China’s commodity derivatives market system, expanding from just futures to options.” Fang Xinghai, vice-chairman of the China Securities Regulatory Commission
She said the newly launched soymeal option contract is expected to meet strong demand for risk hedging tools for everyone in the supply chain.
The soymeal option contract at DCE has 10 market makers, nine of them futures companies and one brokerage. Each contract is for 10 tons of soymeal futures.
Some 22,800 contracts were traded on the first trading day, with combined turnover of 22.86 million yuan ($3.32 million), according to data from DCE.