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Trading corn futures is vital for China to continue its reforms in grain circulation, an article in the People's Daily says. An excerpt follows:
The long-expected decision to approve the launch of corn futures trading at the Dalian Commodity Exchange has been made by the China Securities Regulatory Commission (CSRC).
Corn is the first new staple food futures product since the country's staples market was initiated. The move is expected to push forward reforms in the grain circulation system and further development in the futures market.
Corn futures trading has a long history in the international futures market. Among staple foods such as rice, corn and beans, corn contracts generally serve as a price barometer.
The launch of corn futures will have an impact on a lot of people's lives.
First are the farmers themselves, who will be able to make use of corn futures to glean information about choosing the best opportunity for selling their produce. Some leading agricultural enterprises can then guide farmers to improve cultivation, using market moves to help farmers increase their incomes.
Corn's industrial chain is long. Corn is not just a staple food - it is also an important raw material. In China, about 80 percent of corn harvested is used in producing feed, alcohol and medicines. With corn futures, companies in need of corn on a large scale can ward off risks in the market and strengthen their competitiveness. State-owned enterprises storing up food can also use corn futures to improve their management of market risks.
Corn futures can also provide price information for the country's macroeconomic regulations.
China's futures market is now on a healthy track of development thanks to regulations implemented in the 1990s. This year, the launch of the three new cotton, fuel and corn futures has provided more opportunities for even more development.
Corn is the second most important staple food in China. Production could reach 120 million tons, which inevitably influences the country's economy. The trading of corn futures may strengthen the public's knowledge of futures markets.
Relevant departments have already taken measures to keep the risk of corn futures to a minimum to keep its operation stable.
(China Daily August 30, 2004)
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