China ‘working proactively’ towards launching live pig financial futures contracts as pork prices soar

The Dalian Commodity Exchange is moving closer to launching the type of financial contract in the world’s largest live pig industry

Pork prices in August increased 46.7 per cent from a year earlier, while live pig prices doubled in September from a year earlier

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Pork prices in August increased 46.7 per cent from a year earlier, according to data released by China’s National Bureau of Statistics, while live pig prices doubled in September from a year earlier, according to China’s Ministry of Agriculture. Photo: Reuters

Published: 3:48pm, 11 Sep 2019Updated: 3:56pm, 11 Sep 2019

Under pressure due to the ongoing surge in pork and live pig prices, China has moved closer to launching long-awaited financial future contracts for live pigs to help the country’s farmers and traders manage risks in the world’s largest live pig industry, the head of a Chinese commodity exchange said on Wednesday.

Li Zhengqiang, the chairman of the Dalian Commodity Exchange, told a corn industry conference in the port city of Dalian on Wednesday that his exchange is “working proactively” to launch the live pig futures without providing a detailed timeline.

China’s pig population, which accounts for around half of the world’s total, is expected to shrink by up to 50 per cent due to the outbreak of African swine fever, which in turn is pushing pork prices to all time highs at an alarming speed.

Prices in August increased 46.7 per cent from a year earlier, according to data released by China’s National Bureau of Statistics, while live pig prices doubled in September from a year earlier, according to China’s Ministry of Agriculture.

Wang Ruiting, an analyst at one of China’s largest pig farming companies, said the live pig industry has been expecting and studying the use of futures contracts even though there is no schedule for them to be launched.

A State Council directive on pig farming issued on Tuesday did mention the live pig futures.

China currently does not have pig futures to allow the country’s pork farmers and traders to hedge the risks. In the US, the Chicago Mercantile Exchange launched the world’s first live pig futures in 1966, which were later renamed as lean hog futures.