ZCE’s new year "Commercial Reserve Worry-free" pilot upgrade starts-
futures markets serve chemical fertilizer reserves to ensure spring
farming Our reporter Zhu Huichun
In order to resolve the risk of devaluation of reserve fertilizers and help maintain the supply and price of fertilizers, the Zhengzhou Commodity Exchange will launch the urea "commercial storage worry-free" project in 2021 to support enterprises to resolve the devaluation risk of reserve goods through market-based means.
Recently, ZCE’s 2021-2022 "Commercial Storage Worry-Free" pilot work was officially launched, and further improvements and upgrades were made on the basis of the first pilot, to contribute futures strength to stabilize the supply of fertilizers and ensure food security, and to explore the continuous improvement of the bulk commodity reserve system. A new path.
Since 2005, my country has begun to implement a chemical fertilizer commercial reserve system, which has played an important role in stabilizing the market price of chemical fertilizer and ensuring the supply of spring farming chemical fertilizer.
According to the "National Chemical Fertilizer Reserve Management Measures" released in 2020, fertilizer storage companies can choose to reserve spring fertilizer for any consecutive 6 months from September 1 of the current year to April 30 of the following year. At least 3 months are required. Mandatory time in library.
In recent years, the price of chemical fertilizers in the spot market has fluctuated frequently, often showing a market performance of "not low in the off-season, but not in the peak season".
When the fertilizer storage period expires, if the sales price is lower than the storage price, and storage costs, capital occupation and other storage costs are superimposed, the storage enterprise loses more, which will affect the enthusiasm for storage.
In December 2020, ZCE aimed at the "pain points" of the fertilizer industry, and launched the "Commercial Storage Worry-Free" pilot project for storage companies participating in the national fertilizer commercial reserve project to provide a powerful starting point for storage companies to avoid the risk of inventory depreciation. Mainly by supporting storage companies to participate in the transaction, warehouse receipts, inspection and other expenses incurred in the hedging process of urea futures, reduce corporate risk management costs and help storage companies transfer the risk of price decline during storage.
"The first batch of'Commercial Storage Worry-Free' pilot projects have been smoothly and smoothly concluded. Five pilot companies have completed the corresponding national reserves and inspections in strict accordance with the regulations. The storage of goods is safe and compliant, and the devaluation of 100,000 tons of urea has effectively been hedged. Risks have provided a strong guarantee for the urea supply of 5 million mu of fertile land.” said the relevant person in charge of the Zhengzhou Commercial Exchange.
The reporter was informed that on the basis of the successful pilot of the "Commercial Reserves Worry-Free" project in the first year, ZCE earnestly absorbed suggestions on the needs of agricultural enterprises. The new year's project has been further improved in terms of pilot scale, time, type of enterprise, and subsidy. .
On the basis of the stable operation of the 5 pilot companies in the first year, the number of pilot projects in the new year has been expanded to 10; each company’s support quota is 50,000 tons, which is 2.5 times more than the first batch; the total pilot scale is 500,000 tons, leading The batch size is 5 times the pilot scale.
Pilot projects in the new year cover leading enterprises of all types in the production, trade, and consumption industrial chains.
The ZCE’s subsidy ceiling for each pilot company has been raised from 500,000 yuan to 1 million yuan.
Zhongnong Group is the company that will undertake the largest amount of fertilizer reserves from 2020 to 2021, and it is also one of the first batch of participating companies in the "Commercial Storage Worry-Free" pilot project.
According to Zhu Lian, executive deputy general manager of Zhongnong Group Holding Co., Ltd., at the end of 2020, the urea spot market price fluctuates, which poses greater challenges for companies to purchase urea on time.
Zhongnong Group bought 12,000 tons of urea under the urea 2101 contract, and holds it until January 2021 for delivery and delivery, and timely replenishes the storage inventory of 12,000 tons.
Through buying hedging and delivery, not only the purchase cost of this part of the source of goods is locked in advance, but also the situation that the spot market price rises sharply due to a large number of purchases is avoided, and the spring urea price is indirectly stabilized.
Anhui Huilong Agricultural Materials Group Co., Ltd. is a leading enterprise in the supply of agricultural materials in Anhui Province. Liu Jie, assistant to its general manager, said that the pain point of the national fertilizer commercial reserves is the authenticity of the reserves. The problem, since the successful registration of the warehouse receipt, the 100% authenticity of the stored goods has been ensured.
He said that the "Commercial Storage Worry-free" pilot project combines the delivery system of the national fertilizer commercial storage and the futures market, encourages the registration of reserve urea as a physical warehouse receipt, and realizes the storage, storage, and export of urea through the delivery process. The supervision of the process allows storage enterprises to fulfill the relevant requirements of the national fertilizer commercial storage in a safer and high-standard manner.
According to the reporter’s understanding, under the stricter storage standards of the futures delivery warehouse, urea palletizing and anti-compression work are more standardized, and the safety, authenticity and compliance of urea storage are better guaranteed, and futures warehouse receipts are helpful. In order to enhance the guarantee of goods in warehouse, it can help reduce the inspection cost of relevant government departments; introduce the digital and modern management of the urea futures delivery system into the national fertilizer storage project to provide new ideas for more accurate and flexible inventory data monitoring in the future .
Not only that, but the futures market warrants are open, transparent, and electronic.
After the reserved goods are registered warehouse receipts, relevant government regulatory agencies can take advantage of the electronic futures warehouse receipts to more timely and accurately monitor the quantity, quality, in-warehouse and out-of-warehouse related information of the goods, which will help reduce the supervision cost of the reserved goods.
Xu Shuang, deputy general manager of Sinofert Co., Ltd., said that the "Commercial Reserve Worry-Free" pilot project combines futures tools with the fertilizer commercial reserve project. The warehouse receipts issued by the delivery warehouse of the Commodity Exchange provide a better guarantee for the safety, authenticity, and compliance of the national fertilizer commercial reserve project during the implementation process.
Gu Zongqin, chairman of the China Nitrogen Fertilizer Industry Association, said that ZCE’s "Commercial Reserves Worry-Free" supports storage companies to carry out hedging through urea futures, use market-based means to resolve storage risks, and achieve the purpose of the futures market serving the real economy.
Zhu Huichun
Zhu Huichun