On September 14, Dalian Commodity Exchange (DCE) released the “Notice on Adding Delivery Areas for the Corn Futures”, announcing to add Heilongjiang Province, Jilin Province and Inner Mongolia Autonomous Region as the delivery areas. According to the analysis in the market, with more delivery areas added for the corn futures, the corn producing areas in the four provincial regions in Northeast China will be covered on the basis of not affecting the position of the port warehouse areas in Liaoning as the main delivery areas, which will facilitate the participation of more corn market players. In the new situation of the changes and policy adjustments to the spot corn market, the move will improve the effective functioning of the corn futures.
Jilin, Inner Mongolia, Heilongjiang and Liaoning are the main corn producing areas in China. The corn yield of the above regions increased from 69.45 million tons in 2010 to 94.34 million tons in 2015, accounting for 44% of China’s total. A corn futures analyst said, “The regions of Jilin, Heilongjiang and Inner Mongolia have always shown high correlation with Liaoning region in the corn spot prices. According to the data of the last 9 years, the correlation indexes of the corn prices between the four provincial regions in Northeast China and the benchmark delivery area in Dalian have been above 0.99.”
A DCE official said that with many discussions, the newly designed premiums and discounts fully reflect the differences of spot prices and transportation costs between the regions and Dalian, with the factor of freight increases also taken into account. Considering that great changes may take place in the spot market after the policy of temporary storage is abolished, adjustments will be made on the basis of the actual situations next year. DCE chose to announce the newly added delivery areas and premiums and discounts before the listing of the C1709 Contract to avoid impacting market prices and ensure smooth operation.