HFCS and corn starch expected to get listed as futures in China Summary: SDIC CGOG Futures Co., Ltd. became a member of CSIA in July 2013, in order to assist DCE to promote the listing of HFCS and corn starch as futures. Tags: HFCS, corn, starch, SDIC, benchmark prices, downstream, producers State Development & Investment Corporation (SDIC), a state-owned investment holding company directly under the central government, announced on its official website that its holding company named SDIC CGOG Futures Co., Ltd, became a member of China Starch Industry Association (CSIA) in July 2013, in order to assist Dalian Commodity Exchange (DCE), one of the four futures exchanges in China, to promote the listing of high fructose corn syrup (HFCS) and corn starch as futures. SDIC expressed that HFCS and corn starch were the two key varieties under DCE's current research to become futures. If HFCS and corn starch can become futures, it will bring more opportunities than challenges to domestic producers of these two commodities. HFCS and corn starch becoming futures will have a positive effect on setting the benchmark prices of these two products in China. At present, China has no authoritative benchmark prices of HFCS and corn starch, which means that prices of these two products vary with producers. Because of the intense competition in these two industries, most domestic HFCS and corn starch producers always apply the "low-price strategy", even some producers continuously decline their products' prices, weakening the bargaining power of domestic HFCS and corn starch producers. Under this situation, the market price of HFCS and corn starch in China are irregular at present. The futures price of HFCS and corn starch can be used as their authoritative benchmark prices, which is believed to strengthen the bargaining power of domestic HFCS and corn starch producers. Besides, according to Zhou Bo, a member of DCE, HFCS and corn starch becoming futures will be beneficial to domestic HFCS and corn starch producers and domestic downstream enterprises. The hedging function of futures can ensure both HFCS and corn starch producers and domestic downstream companies lower risks and more profits. Domestic producers can adjust their production plans and sales strategies according to the futures prices, and downstream companies can adjust their purchase volumes at the same time. For domestic HFCS and corn starch producers, if they want to take part in futures exchange, they need to acquire relevant qualification after the listing of HFCS and corn starch are approved. It is worth mentioning that the raw material supply and quality assurance period jointly determine that the range of production and sales is not large. In addition, most HFCS producers in China follow the "factory direct sales" method. As a result, to acquire the futures checking and acceptance qualification will be a priority for domestic HFCS producers to participate in futures trading. Moreover, the companies which want to take part in the futures trading of HFCS and corn
starch in the future will need relevant futures researcher. An excellent futures researcher will be helpful to improve their anti-risk capability. If HFCS and corn starch can become futures, it is believed that these two industries will further develop. For one thing, to be futures, more relevant research organizations will bring more information about not only the domestic market but also overseas market, which may affect the futures prices. At present the channel through which producers gather the information mentioned above are confined to a few organizations only, but the situation will be changed after the futures are approved. Also becoming futures will improve the concentration ration of the industries. It is obvious that large producers will more easily acquire relevant qualifications to enter the futures market than the smaller ones, thus, the smaller ones will face more risks than the larger ones. Finally, more small producers will withdraw from the market or be acquired by large ones, and the concentration ration of the industries will increase. Source: Corn Products China News issued by CCM in September Table of Contents of Corn Products China News 1309: China's corn import may incease to 20-30 million tonnes Chinese corn products Imp. & Exp. in July 2013 China's citric acid export volume up but value down, Jan.-July 2013 Price update of corn products in Sept. 2013 Ex-works price of DDGS surges in Aug. 2013 Fufeng Group performs well in H1 2013 Meihua Group's net profit down 22% YoY in H1 2013 Sales revenue of Baolingbao declines by 20.88% in H1 2013 COFCO Biochemical's net profit decreases by 48.27% in H1 2013 Longlive Bio-technology performs in expectation in H1 2013 HFCS and corn starch expected to get listed as futures in China Feed industry undergoes a downtrend in H1 2013 Corn Products China News, a monthly publication issued by CCM on 20 th, features “Supply and Demand”, “Import and Export Analysis”, “Price Update”, “Market & Company Dynamics”, “Policy”, “Corn Supply” and other more information researched and reported by CCM’s professional journalists. It is a reliable intermediate for you to know more about the corn industry in China even in the globe. About CCM CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals, CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis, and Consultancy Service. For more information, please visit http://www.cnchemicals.com.
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SDIC CGOG Futures Co., Ltd. became a member of CSIA in July 2013, in order to assist DCE to promote the listing of HFCS and corn starch as f...