Deeply participate in the refined risk management of futures market.
Tongzhou cotton industry is one of the large cotton-related enterprises in China. It is an international enterprise integrating industry and trade, which integrates cotton acquisition, processing, cotton textile and garment production and cotton import and export trade. The annual business volume of cotton yarn exceeds 450,000 tons, and the sales income reaches 8 billion yuan.
Fu Rujian, the person in charge of related business in Tongzhou cotton industry, said that the company adopted a flexible hedging strategy according to market conditions, and flexibly selected hedging positions, near or far months, cotton or cotton yarn, domestic or foreign, futures or options as hedging tools with reference to the monthly difference, variety difference and price difference changes of cotton at home and abroad, so as to achieve better hedging effect.
It is worth noting that the premise of using derivatives to avoid risks in the same boat cotton industry is strict risk control management. Fu Rujian said that both current hedging and arbitrage need position matching. If there is exposure, it is equivalent to taking out some positions for speculation. Once the market develops in an unfavorable direction, open contracts will face losses. The greater the exposure, the more losses. Once you encounter an extreme market, it will bring great risks to the enterprise. Therefore, the company constantly strengthens the awareness of risk control and strictly carries out risk control management.
Derivative instruments will play an effective role when incorporated into routine operations.
At the beginning of March, Weishi Textile signed a cotton yarn contract of 2 105 100 lots, with a transaction price of 24,250 yuan/ton. Then there was a big callback. In April, the spot market price rose, the downstream market improved, and orders were overwhelmed. Weishi Textile ended hedging and closed the futures market, with a transaction price of 2265438 yuan/ton.
From mid-April to mid-May, the cotton futures market continued to rise. In order to avoid the risk of falling spot prices, the cotton industry in Tongzhou adopts futures hedging to avoid risks. From May 2 to May 3, 200219 13, Tongzhou cotton industry hedged about 3,000 tons of spot with 16 150 yuan/ton in the CF2 109 contract, and gradually from mid-May to the end of May. Futures hedging not only avoids the spot loss caused by price drop, but also realizes profit through basis sales.
"From May 20021year to July 20021year, the contract price of CF2 109 kept fluctuating. Our customer, a spinning enterprise, locked in some basis resources of our company in order to cooperate with the production and operation plan, but never reached the appropriate futures price. Customers believe that the market fluctuated at a low level in stages, with a limited decline. In order to realize customers' trading at an ideal price lower than the disk, our company assists customers in trading operations with rights. " Fu Rujian said.
"On July 1 day, the customer entrusted us as an agent to trigger the cumulative option portfolio within the operating range of 15700- 16300 yuan/ton at the price of 1 ton, and settled 40 tons every day in 20 working days (1batch of cotton spot). Fu Rujian said that there are three situations of reconciliation. First, if the futures price due is below 1.57 million yuan/ton, the cotton industry in the same boat will make spot settlement with customers at 1.57 million yuan+300 =1.60 million yuan/ton (40*2=80 tons). Secondly, if the futures price is in the range of 1.57 million-1.63 million yuan/ton (inclusive), Tongzhou cotton industry will spot with cotton mills at 1.57 million+300 =1.60 million yuan/ton (40 tons). Third, if the price of the expired futures is above 16300 yuan/ton, it will not be settled on the same day.
"We used cotton futures innovation to carry out spot trade of rights, fully combined with derivatives such as futures options, and combined with spot trade, further reducing the business risks of enterprises and stabilizing profits." Fu Rujian said.
It is reported that right trade is a new trade model that combines derivatives and spot trade. Options and option combinations can be converted into spot pricing methods and embodied in spot purchase and sale contracts to help enterprises manage price risks.
According to the person in charge of the related business of Weishi Textile, before hedging and arbitrage in the futures market, it is necessary to judge the price range of cotton and cotton yarn from both the policy and the market. For example, the government can intervene in empty cotton orders on rallies before dumping and long cotton orders on dips after dumping; In the peak season of cotton yarn sales, empty cotton yarn orders are involved in time, and when there is accumulation in the downstream, more orders are entered at a low point. "The key is to formulate a complete internal futures hedging management system and establish a strict risk management mechanism."