Promote price stabilization and supply, reduce the "pig cycle" volatility——

　　The listing of live pig futures is good for the stable development of the industry

　　Our reporter Zhu Huichun

　　On January 8, with the sound of the gong, my country's first live-delivery futures variety-live pig futures was listed on the Dalian Commodity Exchange.

　　The Party Central Committee and the State Council attach great importance to the stable production and supply of live pigs.

The Central Rural Work Conference held at the end of 2020 emphasized that “we must continue to do a good job in the recovery of live pig production and promote the stable development of the industry”.

It can be said that the listing of live pig futures is a long-awaited event that the futures market and the live pig industry are concerned about.

　　Promote industry price stability and supply

　　At the listing ceremony, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, stated that after the listing of live pig futures, as price discovery and hedging functions are gradually brought into play, breeding companies can use futures prices to arrange production plans and use the futures market to hedge against spot risks. This will further promote the pig industry to achieve price stabilization and supply, reduce the "pig cycle" volatility, and promote the stable and orderly development of the industry.

　　Industry insiders said that the listing of live pig futures is the fruit of the futures industry's pioneering and innovative services to the real economy.

my country is the world's largest producer and consumer of live pigs, with a farming scale accounting for 43% of the world's total.

However, the "pig cycle" has been plagued by pig breeding, trading, and processing companies. Especially in recent years, affected by the African swine fever and the new crown pneumonia epidemic, the price of pigs fluctuates sharply, and the industry has a strong demand for hedging.

　　In this context, live pig futures came into being.

In fact, as early as 2001, DCE initiated the research and development of pig futures.

In the past 20 years, with the growth and maturity of the industry, the listing of live pig futures has become a realistic possibility.

The current live pig supply and demand structure is in a period of optimization and adjustment. The listed live pig futures demonstrates the country's determination to take market demand as the guidance, strengthen anticipatory management, and deepen the service of "agriculture, rural areas and farmers".

　　To make China's pig industry bigger and stronger, in addition to the support of industrial policies, the support of the financial market is also indispensable.

Futures have two basic functions, namely price discovery and risk management.

The listing of hog futures can provide important forward price signals for the hog industry chain and also provide management tools for companies in the hog industry chain to avoid price risks.

He Xintian, secretary-general of the China Animal Husbandry Association, expressed the hope that hog industry enterprises and related enterprises can actively and rationally participate in hog futures transactions, and maintain stable production and effective market supply.

　　Qin Yinglin, chairman of the listed company Muyuan Co., one of the leading companies in pig breeding, said that the listing of pig futures indicates that the development of the pig industry has entered an advanced stage of marketization.

Live pig futures professionals can enter the pig industry to discover value early, predict prices, and guide production.

At the same time, it can also stabilize market supply and benefit more consumers.

　　It is understood that listed companies such as Muyuan, Wen's, Zhengbang Technology, New Hope, and COFCO Meat have been included in the delivery warehouses and sub-warehouses of the pig group, and entered the list of designated delivery warehouses by DCE.

This shows the enthusiasm of leading hog companies to participate in hog futures.

　　Continue to strengthen market cultivation

　　On the first day of listing, hog futures prices fell sharply.

As of the close, among the first batch of 3 contracts listed for trading, the 2109 contract for live pigs fell to 26810 yuan/ton, a decrease of 12.61%; the 2111 contract for live pigs fell to 24935 yuan/ton, a decrease of 15.99%; and the 2201 contract for live pigs fell to 24140 yuan/ton. , A decrease of 15.83%.

　　According to industry insiders, the main contract live pig 2109 refers to the September contract, and the price must be much lower than the current spot market price. Investors need to pay attention when trading.

CICC stated that the supply of live pigs is expected to gradually recover, and the price of pigs will be in a downward cycle in 2021.

From a mid- to long-term perspective, judging that the African swine fever epidemic will strengthen the structural adjustment of the industry and promote the concentration of industry shares to the top.

　　Ran Hua, secretary of the party committee and chairman of the board of directors of the Dalian Commodity Exchange, said that there is a gradual process for hog futures to mature and function. It requires long-term intensive cultivation and careful cultivation, as well as the support and understanding of all parties in the society.

DCE will, under the leadership of the China Securities Regulatory Commission, rigorously and meticulously implement various measures.

The word "stable" shall be the head, strictly regulate the market transaction order, continue to strengthen market cultivation, continuously improve the rules and systems, and guide all parties to rationally and regulate participation.

　　Yang Jian, an international financial expert and director of the JP Morgan Chase Commodity Research Center at the University of Colorado in the United States, said in an interview with a reporter from the Economic Daily that the sharp drop in the price of hog futures on the first day is not unexpected.

First, the industry has a process of participation in the launch of new products.

Comparing with the development experience of American hog futures in 1966, the United States did not participate enough in hog futures at the beginning, and there was no stable relationship between futures contracts and spot for quite some time.

If a similar situation occurs in China's live pig futures, it is not surprising.

In addition, live pig futures use live pigs as the subject of physical delivery.

When reaching the deliverable weight range specified in the near-month futures contract specifications, even if the futures price is not ideal, it is difficult to store the live pigs for delivery to the futures contracts of the more distant month, which brings about the link of the futures price relationship Some special difficulties.

However, when the market operation is on the right track, pig futures can provide the pig breeding industry with considerable price discovery functions and certain risk management functions.

　　Li Zhengqiang, a researcher at the School of International Economics and Trade of the University of International Business and Economics, said that after the listing of live pig futures, together with futures options such as corn and soybean meal, a price risk management tool system for a complete industrial chain from planting, processing to breeding will be formed.

Pig breeding companies, slaughtering and processing companies, pork traders and other pig industry entities can use the futures market to lock the prices of purchased raw materials (corn, soybean meal, etc.) or sales products (live pigs) at a more ideal level in advance to avoid spot price fluctuations The risks brought by this increase the stability of business operations in all links of the industrial chain.