China Securities Regulatory Commission Sanctions Approval of Hog Futures

The China Securities Regulatory Commission (CSRC) has recently approved the Dalian Commodity Exchanges (DCE) listing of hog futures in a long-awaited move for the globe’s top pork producer. The CSRC has stated that it believes this would help producers manage risk and allow further development of the sector, stating that the pork producers of the nation are worth nearly one trillion yuan ($USD 140 billion).

The cyclical nature of the pork market has made producers in China ride what is often termed a ‘hog cycle’ with deleterious global factors (such as the African swine fever in 2018) contributing to a high volatility in pork prices and a less stable economic foundation for producers than need be, considering most commodities have a futures counterpart in the stock market.

Participating in the active trading of hog futures will grant the market continuous and transparent price reference, and in turn allows breeding enterprises to more confidently and thoroughly allocate resources and control scale, which will foster a healthier and more stable development of the industry.

A lot of progress towards the listing of hog futures has been possible only recently due to the ever-increasing homogeneity and standardisation of hog breeds and uniformity of farming practices, yet no matter the minutiae, the approval of hog futures on the DCE is a big step towards a more stable and productive pork industry in China.

Any step towards a more productive and secure commodity amidst the economic fallout of Covid-19 is welcome by the team at Tower Technology.