Dalian Commodity Exchange, Agricultural Futures MarketsA self-regulated, non profit commodity exchange, Dalian has for the last fifteen years built a strong brand and reputation as a reliable market for price discovery and risk management. Despite the recent economic slowdown, the long term trend is for strong growth and expansion of the Chinese economy where demand for agricultural products will continue to grow strongly.
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Against such a positive background, Dalian Commodity Exchange is well-placed to ride this wave and become established as a major agricultural futures trading centre in the Far East. As the demographic trend in the global economy points to a significantly higher population over the coming decades, the pressure on agriculture and livestock will be immense and so will the possibilities for those who grasp them. Dalian Commodity Exchange has set out its vision by orientating itself in three ways, namely towards the world, the market and the future.
Within this overarching vision, Dalian has one goal of becoming a fully functioning market which makes a notable and substantial contribution to economic development in China. It sees itself as doing this in a major way by leading globally through use of its own benchmark price setting and offering a very high quality service. This ambitious commodity futures exchange sees itself achieving its overall goal by securing two basic objectives. Firstly, to grow out from being just an agricultural commodity futures exchange to one that has the full range of futures contracts available.
The other change being targeted is to grow from being a successful regional, agricultural exchange to a major national and international full futures exchange. At the moment Dalian Commodity Exchange is the second largest corn futures exchange in the world after CBOT, so this gives a measure of the ambition of this organisation. While Dalian will want to be competitive with Shanghai Futures Exchange and Zhengzhou Commodity Exchange, it has ambitions to be up there with the major world commodity exchanges such as NYMEX, ICE and CME.
It is already a member of the US Futures Industry Association and the UK Futures and Options Association. Co-operation agreements have been signed with more than 10 overseas commodity exchanges to work towards developing new markets and to share information. While it has ambitions to introduce non-agricultural products and to be influential as a global commodity trading centre, it has already built up a strong base of agricultural commodities and can offer this experience to others going forward. Agricultural Commodities Traded on Dalian Commodity Exchange include:
No doubt as the exchange expands it will be looking to introduce new products available for trading futures. With the world economy having received a shock following the credit crunch and systemic failures in the global financial architecture, commodities seem to be about the only unimpaired asset class available for traders and investors to seek appropriate opportunities. Given the impact of the financial de-leveraging on agricultural as well as other businesses, many farmers are facing difficulty getting funding to replace old equipment or for purchases of basic materials such as seeds and fertilizers. The dynamics still point to long term shortages in agricultural as well as other commodities and so with the likelihood of strong demand continuing, the demand-supply balance will be under pressure and so the trend should be for commodity futures prices to harden going forward. Against such a background of supply pressure on food and expanding world population, the prospects look encouraging for Dalian Commodity Exchange in particular and other emerging agricultural exchanges in general.
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