China, the world’s top soya importer, will launch futures contracts for genetically modified soyabeans on the Dalian Commodity Exchange on November 18, an industry source said.
“The contracts have been approved [by the government] and will be traded on the Dalian Commodity Exchange from November 18,” the source said.
The exchange spokesman in Beijing declined to comment.
Currently, only non-GMO (genetically modified organism) soyabean contracts are traded on the exchange.
The mainland is the world’s top soyabean buyer, with last year’s imports hitting more than 20 million tonnes, most of which are GMO. At present the mainland produces only conventional soya.
It would be the fourth commodity contract launch this year since a crackdown on derivatives in the late 1990s. The mainland has added cotton, fuel oils and corn futures, while it plans to start sugar and soyabean oil futures possibly next year.
Industry officials said GMO soya contracts would help domestic crushers hedge their positions.
“It is certainly good news for crushers,” a Dalian trader said. The government was going to approve three to five large crushers to trade futures contracts overseas, traders said, allowing them to hedge against price swings in global commodity markets.
Most domestic crushers posted negative margins in the first eight months after booking millions of high-priced South American soyabeans. Industry analysts estimated the mainland would import 19.5 million tonnes of soyabeans in 2004-2005, higher than 16.9 million tonnes in 2003-2004.
The mainland is expected to produce a record 18.05 million tonnes of soyabeans in 2004-2005.
China National Grain and Oil Information Centre deputy director Cao Zhi said the mainland’s total annual crushing capacity would rise by a further six million tonnes next year from about 60 million tonnes this year.
The negative crushing margins led to many mainland crushers failing to pay for soya cargoes arriving in the second quarter. This caused huge losses to suppliers and helped CBOT futures tumble from 15-year highs.
Despite growing income on the mainland, which means people can afford to eat more meat, an outbreak of bird flu early this year slowed growth in soyameal demand.
Ministry of Agriculture official Qiao Yufeng estimated demand dropped as much as 10-20 per cent early this year due to bird flu which led to a cull of chicks.
Cao said actual demand for soya crushing stood at about 26-27 million tonnes only – less than half capacity, judging from soyameal demand.