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National & World Ag News Headlines |
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Chinese Pork Imports Reach All-Time High
USAgNet - 10/28/2016
China's largest marketplace for everything from corn and eggs to iron ore says it may have a way to help minimize that risk: a hog futures contract. The Dalian Commodity Exchange is planning to offer trading in hogs for the first time next year, according to two
people who've been briefed about its plans. The contract could help farmers, meat buyers and investors better plan for price moves as well as encourage consolidation in the industry, Bloomberg News reports.
In a country that consumes half the world's pork, price swings have become so large that they hurt the ability of domestic producers to keep up with demand, even with a herd of 450 million pigs. Imports are the highest ever and exceed all other buyers.
"Hogs could become the largest agriculture futures contract in the country," said Jim Huang, chief executive officer at China-America Commodities Data Analytics Inc. "Based on the $295 billion of the animals bought and sold annually in China, a popular
contract on Dalian could generate trading valued at 10 times that amount."
A futures contract is an agreement to buy or sell a commodity at a specific price and date. Speculators use the market to bet on price changes, but the agreements also are used to reduce financial risk by locking in sales for producers and costs for consumers.
While there's no guarantee a new contract will be successful, the Dalian Commodity Exchange has become a benchmark for the expanding raw-material and agricultural markets in China, the world's second-largest economy. Trading on the exchange has
ballooned to 1.12 billion contracts last year from 240.7 million in 2006.
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