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1st Listing Day Sees Active Participation of Spot Enterprises, 1st Transaction Goes to Shandong Zhonggu

Date:24 December 2014
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On December 19, the corn starch futures contracts were officially listed on Dalian Commodity Exchange (DCE). On the first listing day, Shandong Zhonggu Starch Sugar Group Co., Ltd., a subsidiary of Shandong Xingguang Sugar Industry Co., Ltd., concluded the first transaction of the corn starch futures among corporate investors. On the day the company opened the position by selling the Contract CS 1505 at the call auction, concluding the first corporate transaction on a corn starch futures contract.

Cao Yongxing, general manager and chairman of the group, said in an interview that he was excited to become the first corporate client concluding the transaction of the corn starch futures. He said, “The corn starch futures can provide the enterprises with directions in judging prices and are a magic weapon in guiding the production and operation of the enterprises, and we have been looking forward to the listing.” He pointed out that in the future the company will actively use the corn starch futures in hedging on the basis of its own experience and take advantage of the corn and corn starch futures to fix the prices of raw materials and products, so as to stabilize operation, guide production and manage risks. He also hoped that the futures products of corn and corn starch could make a hedging and arbitrage chain and take the important task of avoiding risks for the industry just like the soybean, soybean meal and other futures products.

Established in 2004, Shandong Xingguang Sugar Industry Group Co., Ltd. has 12 subsidiaries, with the business mainly including the raw sugar processing of 1 million tons each year, the corn processing of 1 million tons each year, the thermal power plant, the multi-functional warehouses with a capacity of 2 million tons and the operation of the downstream product line. In recent years the group has established the development direction of “331” with the cane sugar, functional sugar and starch sugar as the “3 sugars” and the starch sugar is the main downstream processed product of corn starch. The group is no stranger to futures trading and for a long time the company has made use of the futures market for hedging on the basis of its spot business conditions. In 2006, Shandong Zhonggu Starch Sugar Group Co., Ltd., which produces starch and starch sugar with the corn as the raw material, was established. As there was no starch product in the futures market then, the company used the corn futures prices in pricing the starch products with the clients on the basis of the settlement prices of the corn futures on a certain date plus processing charges, storage charges and other charges, in which way to control risks. The company has always looked forward to the listing of the corn starch futures, so as to price products directly on the basis of the futures product.

Before the listing of the corn starch futures, the company successfully became a delivery factory warehouse after active preparation and application. An official of the sales department of the group said that in the future the company will take advantage of the delivery factory warehouse, effectively carry out the hedging and manage the business risks. The company will make every effort in warehousing and provide quality services for clients in strict accordance with the corn starch futures delivery system of DCE.

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