The Dalian Commodity Exchange (DCE) began operations in 1993 and has since grown to become one of the most important trading destinations in the world. DCE has already established itself as the largest futures market for agricultural commodities over the course of its history, in addition to becoming the largest futures market for iron ore, oils, coal and plastics.
The Dalian Commodity Exchange, also known as the DCE, is the twelfth largest derivatives exchange in the whole wide world. The number of contracts that were traded in 2018 was 981 million, which was 10.8 percent less than the previous year. As a result, producers are now able to better hedge their positions, and traders can find new opportunities for arbitrage.
The Chinese commodities futures markets' structure is clearly a result of excessive speculation. Around 98% of trading accounts for commodities futures are held by individual investors, according to data given by the China Futures Association. This suggests that commodities markets with higher institutional engagement often see stronger price momentum.
The Dalian Commodity Exchange is the only futures exchange in Northeast China. It was founded in 1993 and has been operating continuously since then. By the year 2021, the DCE has increased in size to include more than 161 members and 464 designated delivery warehouses. It has become one of the most important futures markets for agricultural and metal commodities, with an annual turnover of CNY 141 trillion.
1993 marked the beginning of operations at the Dalian Commodities Exchange (DCE). As of the month of November in 2007, the exchange counted a total of 194 members, 180 of whom were brokers, and 163,837 customers. In June of 2006, Louis Dreyfus became the organization's first member from outside the country. Open outcry accounts for only a small portion of trading activity today; almost all transactions now take place online.
After a dormant period of sixty years, China's futures industry was brought back to life in 1990. The date February 28, 1993 marks the beginning of operations for the Dalian Exchange. In 2013, the DCE transitioned from previously only being an exchange for agricultural related commodiies. The first soybean futures contract was traded on the Dalian Commodity Exchange when it opened for business in the year 2001. The 25th of May, 2009 will mark the beginning of trading in polyvinyl chloride (PVC) futures.
Ethanol, rape seed, live hogs, paddy rice, and weather-related products are some of the other commodities that are traded. According to the volume of trades conducted, the Dalian Commodities Exchange (DCE) is the eighth largest exchange in the world. The daily trading volume of the DCE is 982 million lots, with each lot consisting of 100 metric tonnes (MT). It holds approximately 2% of the market share in all futures, including financial futures, across the globe.
With the introduction of a soymeal contract in the year 2000, trading activities got under way on the Dalian Commodities Exchange. The 25th of May, 2009 will mark the beginning of trading in polyvinyl chloride (PVC) futures. It held a 2% share of the global futures market in 2007 and held half of the market share in the domestic market in 2007.
One of the most important commodities that is traded on the DCE is iron ore, which has an annual trading volume of 982 million lots. Traders are able to gain exposure to the commodity through the iron ore futures contract, which can either be used for paper trading or to take physical delivery of the commodity. Both in terms of consumption and production, China dominates the global iron ore market.
It is essential to keep in mind that the required minimum trading margin amounts to five percent of the total value of the contract at all times. Here you will find additional information regarding the futures trading of iron ore in China.
The lot size for the palm olein futures contract is ten metric tonnes, and buyers and sellers can take physical delivery of their contracts at specialised warehouses that have been designated by the DCE. Note that a minimum trading margin of 5% of the contract value must be maintained at all times; traders should keep this in mind.
Gain an understanding of the market for palm oil and educate yourself further on the topic.
Optional trades in RBD palm oil are also available to market participants. The standard lot size for trading call and put options is ten metric tonnes. Both the exercise style and the expiration date are American, and the expiration date is the same as the day that trading was completed. These options, which are very similar to the futures contract, come with a higher price per tonne.
You'll find more information about the various options for palm oil right here.
You must be familiar with the various protocols that are involved, just as you would be with any other kind of transaction. You have the ability to place limit orders, as well as stop and stop limit orders. These are the two different kinds of orders.
Any transactions involving foreign investors must first go through a registered brokerage firm such as Orient Futures. There are three different methods available for placing orders: orders can be written down, orders can be placed over the phone, or orders can be placed online. Your spread trades, in which two futures contracts are bought and sold at the same time, are considered to be an example of a non-basic order.
In addition to the currently available soybean products, merchants can anticipate trading in soybean meal and soybean oil in the near future. Beginning in October 2022, customers who are participants in the QFI scheme will also be permitted to trade the product. Participants will have the ability to trade soybeans and their derivatives, which will improve their ability to take directional positions.
Orient Futures is both a domestic and international broker, and it is regulated by the Malaysian Monetary Authority (MAS). We are an integral part of the Orient Group, and the China Securities Regulatory Commission has given its blessing to the parent company of our organisation. You can rely on our lineage to assist you in entering the Chinese futures market and conducting business there.
We are the most active broker in China, with the highest aggregated volume across all five of the country's regulated exchanges. When you work with us, you will have direct access to the trading, clearing, and settlement of futures and options on the Shanghai Stock Exchange (Shanghai Sijun Futures) as well as on other major Chinese exchanges.
The state of the commodity markets in China is becoming an increasingly important indicator for the economy in other parts of the world. Futures prices for iron ore and steel rebar went up by 120% and 86%, respectively, in the twelve months leading up to the middle of May 2021. Prices at Chinese factories saw a 6.8% increase in April as a direct result of the surge in the cost of commodities.
Cryptocurrency, commodities, and property are now the only games left for speculators to play in this town. The one-of-a-kind structure of China's futures markets for commodities contributes to the exacerbation of certain of the problems. The process of cracking down on speculative activity often resembles a game of 'whack-a-mole.'
China has made six different commodity futures contracts available to investors from other countries. The volume is still a significant distance below that of Brent and West Texas Intermediate. Prices in markets that use momentum-based trading can stray further from fundamentals than in markets that use other trading strategies. Futures prices are prone to sudden reversals, which is something that global investors need to be aware of.
Ashly Chole - Senior Finance & Technology Editor