On September 9, Dalian Commodity Exchange (DCE) issued the “Notice on Yingkou Port Group Co., Ltd. Setting Extended Warehouse Areas for Corn Futures”, announcing to set the extended warehouse areas at Yingkou Port Group Co., Ltd., a designated delivery warehouse for the corn futures. The extended warehouse areas are located respectively at Liaoning Yihai Kerry Tereos Starch Technology Co., Ltd. in Tieling City, Liaoning Province, and Dehui Jinxin Cereals and Oils Purchasing and Storage Co., Ltd. in Dehui City, Jilin Province. The extended warehouse areas shall be put into use from the C1701 Contract.
In the ten years since the listing of the corn futures, great changes have taken place in the market structure, and the outbound sales of Northeast China corn shipped by sea increased from 15 million tons in 2004 to over 30 million tons in 2014. In order to further improve the quality of market services and facilitate the delivery, DCE released the “Notice on Revising the Rules for Setting Extended Warehouse Areas for Corn” in December 2015, amending the measures for management of the designated delivery warehouses and the detailed rules for delivery and eliminating the institutional barrier for setting remote extended warehouse areas. The revised rules were implemented from C1701 Contract. The extended warehouse areas are the first of its kind set by DCE on the basis of the notice.
The revised "Detailed Rules of Dalian Commodity Exchange for Delivery” stipulates that after the implementation of the extended delivery, there is no change to the benchmark delivery sites of the corn futures, and the buying clients can independently choose to pick up the goods at the main warehouse areas or extended warehouse areas according to their demand. With the whole or part of the goods in the extended warehouse areas, the owners of the goods can choose to pick up the goods at the main warehouse areas or the extended warehouse areas storing the goods. If the owners of the goods choose to pick up the goods at the main warehouse areas, the designated delivery warehouses shall take the responsibility to transport the goods to the main warehouse areas, with freights and other charges covered by the designated delivery warehouses. When the goods in the extended warehouse areas are delivered from the main warehouse areas, the designated delivery warehouse shall transport all the goods in the agreed quantity to the main warehouse areas within ten calendar days after the standard warehouse receipts are written off. During the transportation of the goods from the extended warehouse areas to the main warehouse areas, the designated delivery warehouse shall not charge the storage fees, and shall pay the delay compensations to the owner of the goods. The rates of the delay compensations shall be set on the basis of the related provisions in the detailed rules for delivery.
A market participant said that is will provide the clients with more choices in terms of delivery sites and picking up goods, improve the convenience and flexibility of delivery, help enhance the representativeness of the corn futures prices, and attract more enterprises to conduct hedging in the futures market.