On August 1, DCE announced the notice saying that in accordance with related regulations in the “Measures for Risk Mnagement of Dalian Commodity Exchange”, as of the clearing time on August 6, 2012 (Monday), the the price limit range of the soybean meal shall be adjusted from 4% to 5%, and the margin requirement shall be adjusted from 5% to 7%.
The notice regulates that the contracts meeting at the same time the adjustment regulations of the margin requirement and the price limit range in accordance with the “Measures for Risk Mnagement of Dalian Commodity Exchange” shall be executed according to the values of the margin requriements and the price limits whichever higher.
According to the reports, since the beginning of this year, the several domestic exchanges all lowered the price limit range and the margin requirement. During the adjustment to the price limits and the margin requirements by DCE on April 9, the margin requirement standards for the soybean meal and soybean contracts were changed from 7% down to 5%, and the range of price limit was reduced from 5% down to 4%. After the adjustment this time, the standards of the soybean meal will fall back to the level before April.
According to introduction by market insiders, since June this year, due to the impact from the supply and demand of the actuals and the drought weather in the United States, the sobyean meal both at home and abroad all recorded significant fluctuations. On July 9 local time, the CME Group in the United States announced making upward adjustment of 25% to the initial margin of the soybean and sobyean meal contracts. But against the situation featuring the drought weather and the tightening supply and demand relation on the market, the itnernatioanl soybean category futures continuously hit new highs and presented significant fluctuations. As the processed product of the soybean with the dependence ratio on the international market of up to 80%, the significant fluctuations of the internatioanl prices would inevitably transmit into the domestic market. Previously, related responsible person of DCE once told reporters that preventing the appearance of the systematic risks and regional risks is the bottom line of the market supervision. As one of the most active futures varieties on DCE, since the beginning of this year, the sosybean meal futures has all the time been the major variety in terms of risk monitoring and control. Particularly since April this year, DCE enhanced the dynamic monitoring and control on the situation of various contracts, conducted dynamic measurements on the risks, strictly prevented the accurance of illegal trading, and secured the sound running of the market. This just indicates DCE’s determination of enahncing market supervision and preventing the risks.
Market insiders said that the adjustements to the margin requriements and price limit range of soybean mean by DCE back to the level before April indicated DCE’s supervision thought to prevent the risks in advance and avoiding the risks with market measures. According to the market situation of the soybean meal this year, within the first seven months this year, the monthly increase of CBOT soybean meal was 24.9%, and the increase from January to July was 70.6%. Meanwhile, the increase of DCE soybean meal fuures price in July was 14.9%, and the increase from January to July was up to 36.9%. The fluctuations of the soybean futures price on the domestic markt were obviously lower than those on the international market. Based on the trend of the futures and spot prices, according to related statistics, on the domestic sport market, the ex-factory price of soybean meal in Zhangjiagang on August reached up to CNY 4,350 per ton, and the increase in July was 17.9%, up by 46.5% compared with the price at the beginning of the year and it was also higher than thte futures price. Generally, the running of the soybean meal futures was stable and produced dragging impact of certain degree on the ascending trend of the spot price. Therefore, DCE had a clear thought of preventing the market risks through the adjustments this time to the margin requirement and the price limit of soybean meal.
Meanwhile, market insiders also thought that the release of the measure of preventing the marekt risks through adjustment to the price limit and margin requirement by DCE which is to take effect from next week provided sufficient acceptance and response time to the market, and reduced the impact on the normal development of the market situations. Zhang Ruming of Dalian Fortune Futures said that on the domestic and overseas markets, adjusting the margin requirement and the price limit range is just a normal measure for risk management. The measure is usually applied when the market experience relatively significant fluctuations to prevent and release the risks through moderately making adjustments to the margin requirement and the price limit. In recent years, the domestic exchanges usually use this measure to prevent risks. During the recent period, the soybean meal futures recorded the price limit situations for two times, presenting significant fluctuations. Therefore, enhancing the risk management through adjusting the margin requirement and the price limit is just normal, and will not produce any intrinsic influence on the market prices.
In fact, the current minimum margin requirement for the dominant soybean meal contract on DCE has already been higher than 7%. According to related regulations of the “Measures for Risk Mnagement of Dalian Commodity Exchange”, when the holding position of a single soybean meal contract is higher than 2 million hands, the minimum trading margin requirement level shall be 10%, and when the position is higher and 1 million hands and lower or equal to 1.5 million hands, the minimum trading margin shall be 8%. According to the above regulations, after the closing yesterday, the minimum trading margin levels of the dominent sobyean meal 1301 and 1305 were both higher than 7%. Additionally, it is noticable that the effective date of the adjustment this time is not the next day following the release of the notice, but the implementation is delayed until August 6 (next Monday). This would provide sufficient time for the market to accept and respond, indicating the DCE’s supervision thought of avoiding much influence on the normal running of the market.
Market insiders said that currently, the macroeconomic environment is still in a changing period, the overseas markets are speculating on the weather, and there are still many changing factors on the agricultural commodities market. Therefore, only by taking advance measures to prevent the risks, could we secure the accurance of the systematic and regional risks, and could we further protect the legal interests of the investors in a better way. Market insiders also warned that since the beginning of this year, the innovating paces on the market accelerated. Since the futures market is of the special risk-avoiding function and the investment characteristics, more and more speculation funds will inevitiably enter the futures market. Particularly, it has become a trend that the institutional investors enter the futures market. Against such a background, investors should stay sober in terms of the awareness of the market risks, participate rationally in the market and control well the trading risks.