China is a big country in pig breeding and pork consumption. According to authoritative German statistics, in 2008, the total amount of pig slaughter in major pork producing countries in the world will reach 9710.3 million tons, among which China ranks first, with 44.7 million tons, which is four times that of the third United States10.6 million tons. Judging from the scale of China's pork market, the development of China's pig futures has a broader market base.
The fluctuation cycle of live pig prices is generally around 3 to 4 years. In recent years, this cycle has been shortened to two to three years. Before the introduction of pig futures, it was often counterproductive to rely solely on the government to stabilize the price of pork by planned means, and even entered the strange circle of "expensive meat hurts citizens and cheap pigs hurt farmers", or led to the result of "the price of meat rises and farmers wait and see". If pig futures can be introduced as soon as possible, it can provide price reference signals and hedging tools for farmers and enterprises, provide advanced decision-making reference for national macro-control, and promote the sound and rapid development of China's pig industry with market-oriented mechanism.
Dalian Commodity Exchange has cooperated with relevant units of the Ministry of Agriculture, trade associations, large enterprises and other related parties in many aspects, and has overcome the quality standards, inspection and quarantine, live delivery and other links in the delivery process of live pigs, and initially designed the delivery process of "with the advance, with the inspection, with the delivery and with the collection", which basically met the needs of large-scale delivery. It can be said that after careful preparation by Dalian Commodity Exchange, China's futures market now has the conditions to launch pig futures.
Although the live pig futures in Korea were launched late, on July 2 1 day, lean pig futures 142 lots (all contracts in August), with a total turnover of 49 1 0/000,000 won (1USD pair1000,000 won) and a total position of 42 lots. It can be seen that the launch of live pig futures is in line with the weather and occupies a favorable geographical position.
In the design process of China's live pig futures, absorbing these advantages may help us to avoid detours and improve the chances of success after the launch of live pig futures.
1. Design of contract unit size
The contract unit of live pig futures introduced by South Korea is 1 1,000 kg, while the contract unit designed by CME is 30,000 pounds, which is about10.36 million kg. South Korea has relatively few contract units, which can attract more small and medium-sized funds to participate in pig futures trading, but it will undoubtedly increase transaction costs and increase trading speculation; Chicago Mercantile Exchange (CME) has a large contract unit, which is not conducive to attracting small and medium-sized funds to participate, but it is convenient for futures market funds to participate and is also conducive to controlling market speculation. Considering that China is a big country in pig breeding and pork consumption, in order to cultivate institutional investors in the futures market, control speculative risks in the futures market, reduce transaction costs, and encourage the large-scale development of pig breeding, China's pig futures contracts should learn from each other's strengths as much as possible, and the contract unit is best designed to be 5 tons.
2. Choice of delivery time
The month of live pig futures contract launched by Korea Exchange is a continuous six-month contract, while the month of live pig futures contract launched by CME is bimonthly every year, that is, there are six delivery months of February, April, June, August, 10 and 12 every year. The author thinks that when designing the futures contract month, not only the current hedging demand of traders, but also the fluctuation of pig price in the next 6 to 12 months due to the long pig breeding cycle should be considered, so when designing the futures contract month, the long-term hedging demand of pig farmers should also be met. We should not only consider the hedging needs of traders under normal circumstances, but also consider the hedging needs of traditional holiday prices due to seasonal fluctuations; It is necessary to consider the hedging needs of farmers, as well as the hedging needs of processors and large consumers. In view of this, it is suggested that the months of China pig futures contracts should be 2, 4, 6, 9, 10, 12 and 1.
3. Choice of delivery method
Live pig futures in Korea are settled in cash, and the cash settlement price is the average price index of live pigs traded in Korea 1 1 market. The spot index is based on the weighted average price per kilogram of lean pigs in the spot wholesale market calculated by Korea Animal Products Rating Service Bureau, and CME adopts physical delivery. The cash delivery method is relatively simple and convenient, but due to the lack of convergence between the spot price and the futures price in the delivery month, it is easy to lead to the possibility of excessive speculation by individual institutions by virtue of their capital advantages. At the same time, cash delivery is not conducive to spot traders and processors to enter the market for hedging. In view of this, it is suggested that China pig futures should be mainly delivered in kind.