Live hog futures, as China’s first live-animal and live-delivery futures product, as well as the first new futures product listed this year in China, made its debut on the Dalian Commodity Exchange (DCE) on January 8, 2021.
The launch was attended by Fang Xinghai, Vice Chairman of China Securities Regulatory Commission (CSRC); Jin Guowei, Vice Mayor of Dalian; He Xintian, Secretary-General of China Animal Agriculture Association (CAAA); Qin Yinglin, Chairman of Muyuan Group; and Ran Hua, Chairman of DCE, all of whom also delivered speeches. Luo Hongsheng, Director of the Futures Supervision Department of CSRC read out the approval document. Chen Shaowang, Mayor of Dalian, and Ran Hua struck the gong to open the market for live hog futures. The launch was presided over by Xi Zhiyong, CEO of DCE.
In his speech, Mr. Fang pointed out that, the launch of live hog futures will further fill the gap of livestock futures in China. The live hog futures, together with other products such as corn and soybean meal, will create a price risk management tool system for the whole industrial chain ranging from planting, processing to breeding. It will provide services for industries with a scale of several trillion yuan, and help promote the healthy development of livestock industry. By leveraging the two functions of live hog futures, i.e., the price discovery and hedging, breeding companies can arrange their production according to futures prices, and capitalize on the futures market to hedge against spot risks. This will, in turn, help stabilize the price, guarantee the supply and reduce the “hog cycle” fluctuation, and advance the sustainable development of the hog industry. Enterprises, breeders and investors are expected to participate in the market in a rational and regulated manner, and promote the sustainable development of live hog futures which is closely related to the people’s livelihood, allowing it to gradually perform its functions.
According to Fang, China’s futures industry should remain true to its original aspiration. With a spirit of perseverance, the futures industry should work harder to further improve the market, product, regulation and infrastructure systems, and to expand the high-level, two-way opening of the futures market. The objectives are to accelerate the building of an efficient, dynamic and open futures market.
In his speech, Jin Guowei stated that China is the world's largest producer and consumer of live hogs, and the live hog industry plays a crucial role in China’s economy and the people's livelihood. Thanks to its unique advantage in the development of the live hog industry, Northeast China has become an emerging, important live hog production area. With the strong support of CSRC and some 20 years of planning, the live hog futures has been launched successfully. This is of great significance to ensure the high-quality development of the live hog industry, promote the modernization of the industrial and supply chain.
He Xintian and Qin Yinglin addressed the launch via videos. He Xintian noted that we are facing a complex and ever-changing international environment. He hoped that companies in the hog industry and other relevant industries can participate in live hog futures actively and rationally, manage the risks of live hog production by wisely using the futures tool, and maintain stable production and effective market supply of live hogs. He also hoped that DCE could launch more new products in the future to help establish a sound mechanism of price discovery and risk control in China's animal husbandry production industry.
Qin Yinglin said in his video speech that live hog futures is essential to the development of live hog industry. The launch of live hog futures indicated that the live hog industry has entered an advanced stage of market-oriented development. The live hog futures professionals are in a good position to help participants in the live hog industry to discover prices early, guide production, ease the pain of the “hog cycle”, and manage production and business risks. The launch of live hog futures is expected to benefit more hog farmers, and contribute to the orderly and stable development of the live hog industry in China.
Ran Hua pointed out that the launch of live hog futures, as the first live-animal futures product in China, is a milestone for the product innovation of DCE, marking another solid step forward for the in-depth development of China's futures market. The launch of live hog futures shows China’ s determination and confidence in providing better services for agriculture, rural areas and farmers. However, it should be noted that a progressive course will be needed for live hog futures to become mature and perform its functions. To make that happen, a long-term and careful planning, as well as the support and understanding of all the relevant stakeholders are needed. In particular, efforts will be made to strictly regulate the market trading order, continuously strengthen market development, constantly improve the rules and regulations, and guide all parties in participating in the transaction in a rational and regulated manner. It is believed that with the strong support of all stakeholders, the live hog futures, as the first new product of China's futures market in 2021, will provide good services for the production, circulation and consumption of China's live hog industry in an effective and efficient manner.
When presiding over the launch, Xi Zhiyong said that the launch of live hog futures, as the first new product launched in China’s futures market in 2021, underscores the futures practitioners’ original aspiration to serve the real economy and the industry. It also shows the long-standing tradition of DCE to work with perseverance and overcome obstacles with pioneering spirit. The launch of live hog futures is expected to promote the high-quality development of China's agriculture and livestock sectors, and make positive contributions to stabilizing the market, ensuring people's livelihood and reassuring the public, and better serving the establishment of a "dual circulation" development pattern that takes domestic development as the mainstay, with domestic and international development reinforcing each other. In the future, DCE will work with all relevant stakeholders to build and maintain the live hog futures market so as to better perform its market functions and contribute to the stable and healthy development of the live hog industry.
As for the next step, DCE will, by further implementing the guiding principles of the fifth plenary session of the 19th Central Committee of the CPC and the Central Economic Work Conference, aim high and remain down-to-earth. It seeks to build itself into a world-class derivatives exchange that integrates futures and physical, synergizes exchange-traded and OTC markets, and connects domestic and overseas markets, thus making a greater contribution to the high-quality economic development in China.
The launch was attended by leaders from the Dalian Bureau of CSRC, Dalian Financial Development Bureau, futures companies, and depository banks, among others.
Disclaimer: This English translation may be used for reference only. In cases there is any discrepancy between the English version and the original Chinese version, the original Chinese version shall prevail. Dalian Commodity Exchange may change or update this English translation without any prior notice and shall accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or change with regard to this English translation.
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