At the Ninth China International Oils and Oilseeds Conference (CIOC) held in Guangzhou on November 6, an official of Dalian Commodity Exchange (DCE) said in his speech that the futures of oils and oilseeds have become one of the best-performing sectors in the domestic futures market, and next DCE will further refine the listed products, make effective preparations for the expansion of the products on the night trading and the listing of the options of agricultural products, vigorously explore the development of the OTC markets, step up the cultivation of industrial clients and institutional investors, and further improve the structure of investors.
When addressing the conference, the official said that as one of the briskest product sectors in the domestic futures market this year, the futures market of oils and oilseeds shows the following features: first, the operation is stable with good price regression, effectively reflecting the trends of price development on the spot market; second, the industrial clients present in-depth participation in various forms, and with the enterprises above the designated scale in the squeezing industry participating in the soybean meal futures accounting for more than 90% of the total, it is one of the sectors with the highest industrial participation in the domestic futures market. In addition to the traditional forms of hedging and arbitrage, the basis sales has become a new sales mode on the spot market of oils and oilseeds; third, the futures market of oils and oil seeds has become an important testing ground for institutional innovation. The pilot business of warehouse receipts swap introduced for the first time on the soybean meal product last December effectively solved the problem of the inconvenience for the buyers to receive the goods in other places, the “three-step delivery” introduced in July has optimized the delivery process and made the hedging business more convenient and the market of oils and oil seeds was also the first to adopt the basis pricing trade, with the capacity of the market for serving the real economy fully demonstrated. In all the aspects such as steady operation, participation of enterprises, the capacity of member service and the DCE’s achievements in innovative businesses, the futures market of oils and oilseeds is one of the best-performing sectors in the Chinese futures market.
But he also pointed out that compared to the developed overseas futures markets and other domestic mature products, the market of oils and oilseeds is yet to be expanded and deepened with the market to be further fostered: some products feature large open interests and relatively insufficient liquidity, and some important products such as No. 2 Soybeans are far from brisk, extremely mismatching the position of China as the world's largest soybean importer and consumer; there is still the problem that the brisk contracts lack continuity, greatly restricting the functioning of the market; the structure of the market investors is yet to be further optimized.
In terms of DCE’s work in future, the official said that in the next step, DCE will continue to focus on the purpose of serving the real economy, constantly optimize the contract rules, vigorously make innovation in businesses, continuously improve the structure of investors, strive to cut down the trading costs and increase the efficiency of market operation. The main efforts include:
First, DCE will further refine the listed products and speed up the improvement of the systems and the innovation work. DCE will continuously optimize the institutional arrangements for hedging and arbitrage, relax the requirements for positions and margins, significantly simplify the approval procedures, maximize the convenience for the industrial clients to participate in the market, and expand the warehouse receipts swap business and the scope of application of the three-step delivery, while speeding up the introduction of the measures to make the No. 2 Soybeans brisker in adaptation to the trend of internationalization.
Second, DCE will actively and effectively expand the products on the night trading and prepare for the listing of the options of agricultural products. DCE will introduce the night trading for the soybean meal and other highly international products at appropriate time, and choose soybean meal and other products as the first pilot products for options while introducing the measures at appropriate time in accordance with the unified arrangements of the China Securities Regulatory Commission (CSRC).
Third, DCE will meet the demands of the spot market and vigorously explore the development of the OTC market. DCE plans to integrate the standardized floor trading market and the non-standardized OTC market through the measures such as setting up the platform for warehouse receipts swap and improving the capacity for the clearing service, in a bid to meet the diversified demands of all kinds of corporate clients, promote the realization of the “futures-spot linkage” in domestic commodity circulation and improve the market system.
Fourth, DCE will continue to step up the cultivation of the industrial clients and institutional investors and further improve the structure of investors. Through the innovative businesses such as banking-futures cooperation and new-type grain banks, DCE will gradually guide funds, securities, banks, credit and other market players into the commodity futures market, so as to achieve the effective linkage of financial and industrial sectors, improve the structure of the futures market participants and enhance the operation quality of the entire industry.
He said that currently China's futures market has entered a new period with the market pattern experiencing profound changes. As the “Some Opinions of the State Council on Further Propelling Sound Growth of the Capital Market” and other policies have been introduced successively, the legislation of the “Futures Law” has been accelerated and the design and preparation for the option instrument have been stepped up, the futures market will see new opportunities for development. Under the influence of multiple factors such as the economic restructuring, the enterprises related to oils and oilseeds will have more urgent demand for risk management, posing higher requirements for the functioning of the futures market. In this situation, DCE hopes that the industrial clients can effectively strengthen the internal management and make better use of the futures instruments by means of hedging and interest arbitrage with the aim of risk management; the institutional investors can develop more finance products, actively participate in the trading, enhance the liquidity of the futures market and improve the quality of market operation; the member units can continue to expand clients in industries, design and provide better solutions to risk management, vigorously participate in the improvement of DCE’s contract rules and the institutional innovation, and provide quality services for the industries; DCE will continue to adhere to the principle of “Openness, Fairness, and Equity” and safeguard the normal market order. Through joint efforts and development, DCE will make new contributions to promoting the transformation and development of China’s real economy.
In his speech, Zhang Jingcheng from Bursa Malaysia said that this year great changes have taken place in the global macroeconomic situation and the policy regulation, the new challenges for the economy have caused new adjustments, especially the commodity markets have met with significant impact, and it is necessary for any country to take measures to respond. The market of oils and oilseeds may feel the biggest impact among all agricultural products, and the enterprises should grasp the situation and make effective use of the derivatives market. The conference will provide the enterprises in the industry with the access to and the platform for latest information and exchanges.
At the one-day conference, the nine domestic and foreign experts from the Development Research Center of the State Council, Cargill, Chinatex and related investment and consulting companies delivered keynote speeches on the macro-economic situation, global grain pricing mechanism, the status and development trends of China's squeezing industry, how to use options to develop the market, the supply and demand and expectation for prices of palm oil and soybean and other topics. Meanwhile, the conference includes two special forums on "trans-market arbitrage trading models and strategies" and “outlook for the development of the market of oils and oilseeds”, with 11 invited experts making discussions on the two topics.
With the theme of "New Circumstances, New Strategies, New Development", the conference has attracted the participation of the representatives of more than 400 units from home and abroad such as government departments, industry organizations and experts, spot enterprises, futures companies and investment institutions. This year, affected by the macroeconomic operation and internal and external environments, the prices of bulk commodities have continuously fluctuated and the imbalance of supply and demand has been exacerbated. Since the third quarter, under the influence of the increased yields of the U.S. soybeans, the slowdown of the downstream consumption growth in China and other negative factors, the futures prices on the domestic market of oils and oilseeds have continued to go down. In this context, the market players have been highly concerned about the supply and demand in the future, the price trends, the new strategies for futures investment in the new situation and other aspects, making the conference become the focus of the market participants. The attendees believed that with the economic development entering the “new normal” and the increasingly volatile industrial pattern, the conference has undoubtedly provided the enterprises with an effective platform for full access to information, situation analysis, mastering directions and capacity improvement, further promoting the futures-spot integration and exchanges and cooperation of the enterprises in the industry.