FX.co ★ China launches hog futures as hedging tool of volatile prices

Pork has always been the cornerstone of the Chinese cuisine. So, both Chinese consumers and farmers complain about highly volatile pork prices which are sensitive to a variety of factors. In economic terms, pork prices are the main driving force of food prices which in turn are viewed as a barometer of consumer inflation. No wonder, the question of bringing pork pricing under control is the matter of the nationwide importance.

The solution has been found. China’s securities regulator announced that live pig futures would be listed on the Dalian Commodity Exchange. The authorities took the right decision which mirrors the spirit of the times. China’s officials are certain that a precise mechanism of hog pricing will benefit both consumers and supplies. China’s securities regulator also stated the launch date, so hog futures will be available for trade in March. Market participants will be able to sell and buy contracts for hog deliveries in September and December this year.

Meanwhile, anyone can monitor the dynamic of futures contracts. For example, live pig futures closed the last trading session with a plunge of over 7% from the opening price. Thus, September futures dropped to ¥28,290 per ton.