China’s second commodity options, white sugar options, started trading on Zhengzhou Commodity Exchange Wednesday [19 April 2017]. “Businesses can now use a combination of investment tools including spot contracts, futures contracts, and options to manage risks more effectively,” said Ma Wensheng, chairman of Xinhu Futures, a Shanghai-based futures brokerage firm…Full Article: Xinhua Apr 2017

Key Points

  • Commodity options differ from futures contracts in that investors exercise the option to buy or sell the underlying assets at a predetermined price without the obligation to buy/sell.
  • China reportedly has 40 million sugarcane farmers.

ChinaAg Comments

  • In March 2017, the Dalian Commodity Exchange launched new soymeal options.
  • In December 2014, the Zhengzhou Commodity Exchange announced they would launch evening (21:00 to 23:30) trading for products such as cotton, sugar, and rapeseed meal in order to trade at the same time as New York’s Intercontinental Exchange (ICE).
  • In late 2013, the Zhengzhou Commodity Exchange (ZCE) expanded its rice futures contracts from one variety (Indica rice) to three rice varieties (e.g. short-grain rice – Japonica rice and late Indica rice).
  • In late 2012, the ZCE announced plans to expand to include rapeseed and rapeseed meal futures contracts.
  • Founded in 1990, the ZCE was the first experimental futures market approved by the Chinese State Council. The listed products on ZCE includes wheat (including strong gluten wheat and hard white winter wheat), cotton, white sugar, pure terephthalic acid (e.g. PET bottles), rapeseed (including rapeseed oil and meal), early long-grain rice and methanol.

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