Zhengzhou Commodity Exchange: Continue to optimize cotton and cotton yarn futures rules and increase efforts in building over-the-counter platforms
On September 15, the Zhengzhou Commodity Exchange (hereinafter referred to as Zhengzhou Commodity Exchange) jointly organized the Corps State-owned Assets Supervision and Administration Commission, the Corps Development and Reform Commission, the Corps Financial Bureau and the Corps Supply and Marketing Cooperative to jointly organize the “Response to the situation and open a new situation – the Corps Cotton Industry HighQualityDevelopment Forum”.
The reporter learned at the forum that in 2021, affected by factors such as imported inflation and the impact of the epidemic, cotton price fluctuations will increase. The annual price volatility will reach 24%, an increase of 20.6 percentage points year-on-year, and market risks will increase significantly. In this context, cotton futures functions efficiently and becomes a “stabilizer” and “propeller” for the healthy development of the industry, which is mainly reflected in three aspects: First, accurate price discovery. The correlation between futures and current prices is as high as 98%, providing an accurate “barometer” for participants in the cotton industry chain to judge the market situation. Second, hedging is stable. According to statistics, through hedging in the futures market, 98.3% of the risk of cotton spot price fluctuations can be avoided, effectively reducing the operating risks of cotton-related enterprises. Driven by this, the cumulative warehouse receipt registration volume of cotton futures has increased from 572,000 tons in 2017/2018 to 1.92 million tons in 2019/2020. About 32% of the country’s cotton has been maintained and sold through the futures market. Third, the market structure is excellent. In recent years, the proportion of positions held by legal person customers in cotton futures has continued to increase, participants have become increasingly institutionalized, large-scale and professional, and the market structure has become more reasonable. In the variety function evaluation ranking organized by the China Securities Regulatory Commission in the past two years, cotton futures have ranked among the best.
It is understood that relying on cotton futures, Zhengzhou Commodity Exchange continues to deeply cultivate the cotton industry and expand the comprehensive effectiveness of the futures market in serving the high-quality development of the cotton industry.
Wang Xiaoming, deputy general manager of Zhengzhou Commercial Exchange, said that in the next step, Zhengzhou Commercial Exchange will be more proactive, comprehensively optimize and enhance the functions of cotton futures, and promote the high-quality development of the cotton industry, especially the Xingtuan cotton industry. The first is to continue to optimize cotton and cotton yarn futures rules, so that high-quality institutional supply becomes a new driving force for the high-quality development of the cotton industry. The second is to explore the internationalization path of cotton futures and study the methods of opening up cotton futures from multiple dimensions and perspectives. The third is to closely follow the market needs, optimize and adjust the layout of delivery warehouses, so that cotton futures can benefit more cotton-related enterprises in a wider area and within a larger scope. The fourth is to maintain investment in the cotton “insurance + futures” pilot and launch two more projects in Maigaiti and Tumshuk in 2021. The fifth is to increase the construction of over-the-counter platforms, starting from the China Cotton Warehouse Warrant Purchase and Sales Zone, enriching the functions of the off-site platform, prospering the development of the over-the-counter market, and contributing more to expanding sales channels, reducing financing costs, and enriching risk control methods for cotton-related enterprises. Multiple futures power. Sixth, the cotton futures market will be deeply cultivated, the organization of training and research activities will be intensified, the interaction between capital and industry will be enhanced, and the vitality of the industry will be effectively enhanced.
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