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Jilin Yuntianhua: Agricultural Integration Requires Low-cost Promotion of Insurance + Futures/Options

Date:22 June 2018
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By centering on serving the real economy and the requirements of the No. 1 Central Document, the futures market has kept exploring new methods of agricultural risk management and made helpful attempts like over-the-counter options and “insurance + futures” in servicing agriculture, rural areas, and rural residents and helping farmers to avoid risks in recent years. As a leading agricultural industrialization enterprise in Jilin Province, Jilin Yuntianhua has always targeted to realize integrated operation through the closed loop mode. In 2017, it made a great breakthrough in the integration construction through the “contract farming + insurance + futures” mode: a great closed loop has been formed in the agricultural production end as farmers has adopted “insurance + futures” and enterprises over-the-counter options.

Zhang Sheng, General Manager of Jilin Yuntianhua, expected the early listing of corn floor options. He said that under the current mode, the risk management subsidiary of a futures company can only engage in risk hedging by duplicating options from futures, which is of high cost and risk and leads to high insurance fee and options fee. As a result, the scale and scope of pilot programs are highly restricted. If corn options is listed, it can offer pricing reference for over-the-counter options and provide the market with a low-cost and efficient hedging instrument, thus reducing the hedging cost of over-the-counter options and helping to facilitate the sound and sustainable development of the “insurance + futures/options” pilot programs and the over-the-counter options market.

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