Published On: Wed, Nov 26th, 2014

CSRC Approves DCE Trading Of Corn Starch Futures

Liu Xingqiang DCE President -

Liu Xingqiang DCE President –

On November 21, the China Securities Regulatory Commission (CSRC) approved the Dalian Commodity Exchange (DCE) conducting the trading of the corn starch futures, and the specific time for the listing of the contracts will be set by DCE in accordance with the market conditions and the progress of the preparations after the CSRC officially approves the related contracts.

In the official reply, the CSRC requires DCE to make overall arrangements and adequate organization, strengthen communication and coordination, improve the supervision system and the risk-control measures, formulate the response plans, and effectively guide the opinions, so as to ensure the smooth introduction and stable operation of the corn starch futures.

As a processed corn product, the corn starch is the basic raw material for starch sugar, beer, medicine and many other industrial products with more than 3,500 downstream products, taking an important position in the national economy. China is the world’s second largest producer and consumer of corn starch. In 2013, the production was around 23.5 million tons, with an output value of RMB 65.8 billion and an apparent consumption of about 23.4 million tons.

In recent years, corn starch prices have recorded significant and frequent fluctuations, and from 2009 to the first half of 2014, the average factory price of corn starch nationwide fluctuated between RMB 1,606 and 3,134 / ton with a range of about 95%. In the first half of 2014, the average factory price fluctuated from RMB 2,608 to 3,095 / ton with a range of 18.7%, and the spot enterprises showed strong demand for hedging. The listing of the corn starch futures will help improve the pricing mechanism on the spot market, provide a hedging instrument for related enterprises and promote the healthy development of the industry. Meanwhile, the corn starch futures and the corn futures will form a relatively complete product line, helping enriching the product line of the corn industry chain and further expand the scope of the futures market serving the national economy.

Launching the research in the corn starch product in 2012, DCE has conducted extensive and in-depth surveys to the corn starch industry, making thorough analysis of the key, difficult and risk-related problems, comprehensively soliciting the opinions and suggestions from the state-level departments, industry associations, industrial clients and member units and formulating systematic market training plans as well as pushing forward the training in an orderly way. The project was approved by CSRC in August 2014. According to the relevant procedures, next DCE will publicly solicit opinions and suggestions on the contracts and rules, which will be submitted to the deliberation of the Council after further improvement, and after the approval of the Council, the application for the listing of the corn starch futures contracts will be submitted to the CSRC.

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