The function of urea futures has begun to show its effect

Enterprises participate in a stable and rising period, and the market linkage is smooth

Since the listing of the world's only urea futures on the ZCE on August 9, 2019, corporate participation has risen steadily, the futures market has been linked smoothly, and the urea futures function has begun to show its effect
.

According to the relevant person in charge of the Non-Agricultural Products Department of the Zhengzhou Commodity Exchange, urea futures have presented three characteristics in the past two years of operation
.

"The functional effects of urea futures have already appeared in four aspects
.

First, urea futures have formed a good industrial atmosphere
.

Second, sell to hedge and lock in spot profits
.

Third, buy in value preservation to reduce the cost of raw materials
.

Fourth, realize the joint hedging of industry chain traders
.

"In view of the difficulty in pricing and disposal of spot inventory, it is difficult for small and medium-sized enterprises to use spot inventory as collateral to apply for loans from banks.
The urea futures price formed in combination with futures transactions has the characteristics of authenticity, expectation, continuity and authority, which helps Realize'movable property financing'
.

　　The specific method is: the customer transfers the stock rights to a third-party trading company designated by the bank as a pledge, and the bank lends to the customer at 85% of the value of the inventory, and the loan interest rate is less than 6%
.
The third-party trading company has the right to directly dispose of the goods if the urea futures price drops by 11% during the bank pledge period (89% of the purchase price can be recovered)
.

　　"The effect of this is that the mortgage rate has increased by at least 15%, the loan interest rate has been reduced by at least 4%, and the efficiency of lending has been greatly improved
.
It not only protects the safety of bank credit funds, but also solves the funding difficulties of small and medium-sized enterprises
.
" The person in charge said
.

　　In addition, in combination with the "pain points" of the commercial reserves of chemical fertilizers, ZCE also launched the "Commercial Reserves Worry-Free" program
.

　　"We have learned that many storage companies participating in the National Fertilizer Commercial Reserve Project also hope to transfer the risk of inventory depreciation through hedging in the urea futures market
.
Therefore, from January to April 2021, ZCE launched the "Commercial Storage No Worry" The pilot project aims to improve the confidence and ability of enterprises to undertake storage, guarantee the supply of fertilizer for spring plowing, and stabilize the cost of agricultural planting
.
The most important thing is the exchange's additional storage fees and storage fees incurred by storage enterprises participating in the hedging process.
Fees, quality inspection fees and related handling fees
.
" The person in charge said
.

　　According to reports, the implementation areas of the "Business Storage Worry-Free" project are Henan, Hebei, Shandong, and Anhui.
The first batch of pilot units include Sinofert Co.
, Ltd.
, Zhongnong Holding Co.
, Ltd.
, and Anhui Huilong Agricultural Materials Group Co.
, Ltd.
companies
.
Many storage companies said that the futures market has broadened procurement channels to help replenish commercial storage sources, the delivery system guarantees the safety of goods in the warehouse, and related reductions and exemptions have also eased the financial pressure on enterprises
.

　　Regarding the future development plan, the person in charge said that the goal of urea futures is to adhere to the purpose of serving the real economy, continuously improve the quality of urea futures operations, promote basis trading, and gradually form a core production and sales area as the main body, with extensive participation from multiple regions The ideal pattern promotes the coordinated and healthy development of the industrial chain
.

　　First, continue to improve the rules and systems, optimize the delivery layout, expand the scope of services in the futures market, and help the smooth operation of the market
.

　　The second is to continue to adhere to market promotion and investor education to improve the professional level of industrial enterprises and market investors
.

　　The third is to establish smooth and efficient communication channels with relevant ministries and commissions, industry associations, upstream and downstream enterprises in the industrial chain, and other various market entities, and work together to improve the quality of urea futures operations
.