Heavy! What impact on the livestock industry as pig futures trading is approved

On April 24, the China Securities Regulatory Commission officially approved the Dalian Commodity Exchange to launch pig futures trading After the listing of domestic pig futures, it is expected to be the first to attract Wen's shares, Makhara shares, Zhengbang Technology and New Hope and other industries head enterprises to participate What impact will pig futures trading have on the industry? FCVfCV pig is China's most valuable agricultural and sideline products, the market size of nearly one trillion yuan The pig industry chain is centered on pig farming, involving feed processing, veterinary vaccines, slaughter, food processing, logistics, retail, catering and many other industries The introduction of pig futures is an important measure of the economic development of service entities in China's futures market The full play of pig futures function plays a positive role in improving the mechanism of pig price formation, improving the risk management ability of market subjects and helping the development of pig industry "Next, the CSRC will urge Dalian Commodity Exchange to do a solid job of pig futures listing preparations to ensure the smooth launch and sound operation of pig futures." The SFC said fCV China's pig futures listed, has been brewing for several years "Several opinions on promoting the stable development of agriculture in 2009 and the sustained increase in farmers' income in 2009" has pointed out that the spirit of the pig industry should be steadily developed by adopting such measures as futures trading, and that the appropriate time should be given to launch pig futures trading as soon as possible In February 2018, the SFC formally approved the application for pig futures from the Big Business Institute On November 30, 2019, at the 15th China (Shenzhen) International Futures Conference, Vice Chairman of the CSRC Fang Xinghai also said that pig futures are a futures variety that is particularly needed under China's specific production situation and consumption habits, and we will work hard to further build consensus and fill this gap as soon as possible fCV and in foreign markets, pig-related futures varieties have gone through several iterations In 1961, CME launched frozen pig-fish futures contracts for delivery in kind, and in 1966, CME began trading live pig futures At the end of the 20th century, in order to adapt to the development of the American pig spot market, its pig futures were adjusted again, and the 1996 live pig futures were changed to the lean pig futures contract, and the delivery target was changed from live pig to lean pig carcass fCV currently, CME's lean pig futures turnover, second only to the introduction of live cattle futures in 1964, ranked second in the CME listed livestock products In contrast, although domestic pig futures started late, but the size of the column, out of the column has already leapt to the first place in the world, market space, risk hedging demand is obviously greater Market analysis believes that after the listing of domestic pig futures, it is expected to take the lead in attracting Wen's shares, Makhara shares, Zhengbang Technology and New Hope and other industries head enterprises to participate In addition, the listing of pig futures will also be with soybean meal, corn and other feed varieties to form a sound industrial chain, so as to further enhance the aquaculture industry's supply of risk tools, and thus increase the industry-wide risk hedging efficiency What impact will the introduction of fCV pig futures on the industry? the impact of the fCV on the pig cycle
the fCV pig cycle is determined by supply and demand, while pig futures are only a financial derivative and do not change the actual supply and demand relationship Chinese people like to eat pork, pork therefore in meat products accounted for a large part, as a necessity of life, the demand side is very stable, and the impact of prices, mainly supply-side changes Farmers based on price changes, choose to increase production or reduce production, the output of the column in turn affects the price of pork, so that the formation of a cycle, the price trend plays a role in promoting fCVfCV futures will be launched, will increase short-term fluctuations, and reduce long-term fluctuations, the peak of the pig cycle decreased, the trough increased, that is, the long-term amplitude is smaller The introduction of pig futures will not eliminate the pig cycle, but will weaken the impact of the fCV on farmers
fCV farmers have an additional hedging tool to lock prices in advance and shift risk to speculators fCV but this tool is not applicable to all farmers, because the futures provide for the delivery date, to that day must have goods can be delivered, retail outlet volume is very unstable, so can not participate For large-scale aquaculture enterprises, this is a substantial advantage, can stabilize the head of the column enterprises, the use of futures hedging, improve the stability of performance This accelerates the increase in market concentration the impact of the on the share price of pig-listed companies fCV has been influenced by the catalyzing of the African swine fever epidemic, the scale-up of pig farming in China has been accelerated, the productive biological assets of the major pig breeding companies have stabilized and recovered, and in August last year, the output of the top 10 pig farming enterprises increased by 21.24% year-on-year, accounting for a proportion of the total output of the column increased from 5.96% in the first quarter of 2018 to 7.70% In 2019, the top 20 enterprises, including Wen's, Makhara and other familiar giants, but also Zhengda, Tianbang, Zhengbang and other traditional pig enterprises, more haida this kind of feed giant into breeding after the show fCV Wen's, Muyuan still occupied the first echelon of pigs out of the column, Wen's annual out of the column of 18.52 million pigs, The pastoral followed closely, the annual column 10.25 million head Together, the two giants account for 28.77 million, or nearly half of china's top 20 pig companies A total of 11 enterprises with 1 million to 10 million out of the annual column, with a total volume of 25.83 million, accounting for 43% of the top 20 pig enterprises, of which, Cofco meat out of the column about 2 million There are seven pig enterprises with less than 1 million pigs in the annual column, with a total number of 5.98 million, accounting for only 9% fCV for the industry's leading enterprises, because of the hedging of futures, performance can be locked in advance, the cycle attributes will also weaken Excellent management, out of stable enterprises, will enjoy a high premium for a long time Farming industry de-retailization, market share increase is the trend, pig farming gradually high-tech, with a scarce head enterprise, will be strong Hengqiang the impact of the of fCV on economic forecasts
the price of fCV futures is leading, producers can make decisions in the next production cycle according to the changes in futures prices, presciently increase or decrease production, thus improving the balance of supply and demand in the market and curbing the sharp fluctuations in market prices fCV countries can use futures prices as a reference basis for macro-policy, proactive, advance regulation, to stabilize prices is very helpful