"Evaluation" On The First Day Of The Listing Of Pig Futures: The Price Effectiveness Has Been Preliminarily Verified, And It Is Imperative To Enhance The Market Capacity

Some people in the industry describe the performance of pig futures on the first day of listing as "open the door black"? However, with the national inventory returning to 90% of the previous years, and the super high gross profit margin of over 58% for breeding enterprises, shouldn't pig prices fall?

On January 8, the pig futures, which had been brewing for several years, were officially listed on the stock exchange. On the same day, all three listed contracts fell. By the end of the day, the main 2109 contract fell by 12.61%, Yuanyue 2111 contract fell by 15.83%, and 2201 contract fell by 15.83%, approaching the daily limit of 16%.

The main reason for the above trend lies in the "high" listing benchmark price of pig futures and the strong expectation of all parties in the market for the fall of pig price in the second half of the year.

In contrast, as a service of several trillion yuan industrial scale, the smooth operation of pig futures in the early stage of listing is more important, which is the premise for the future pig futures to grow and mature. However, from the perspective of price effectiveness, transaction and position data, its first day performance is still stable.

In the next step, how the pig futures will quickly improve the market capacity to meet the hedging needs of breeding enterprises is worthy of attention.

On the first day of listing, 2.3 billion funds entered the market

By the end of November 8, 2020, the total positions of the three contracts of pig futures were 18067, and the position fund was about 2.293 billion yuan.

Compared with the popular mature varieties, although the transaction scale is not high, we should know that this is only the first day of listing. At the same time, the pig futures contract design also adopts the idea of "large contract".

Taking the main 2109 contract as an example, the settlement price on January 8 was 28290 yuan / ton. According to the 15% margin standard of speculative trading, the margin for each pig futures position required 67900 yuan.

Its investment threshold is not only significantly higher than other agricultural products futures, but also almost reaches the margin level of some higher value non-ferrous metal futures, which itself is not conducive to the large-scale intervention of trading funds.

In this way, less than 20000 positions on the day of listing belong to the normal level. In the future, with the maturity of the variety, its position size will be further improved.

From the point of view of sub contracts, the first day's transactions were mainly focused on the main 2109 contracts. During the whole day, the total number of transactions of the contract was 91056, while that of 2111 and 2201 contracts was less than 3000.

This shows that even if the position cost and intra day transaction cost of pig futures are relatively high, there is no need to worry about the attention, participation and activity of all parties in the market.

The "trading position ratio" index of 2109 contract reached 6.08 times, which was a common phenomenon in the early stage of new varieties listing in the futures market, and it would gradually decrease after the varieties mature and run.

It should be pointed out that, compared with commodity futures contracts that have already been listed, pig futures are more inclined to industrial investors in contract design, trading and delivery rules. For example, hedging and speculative clients' implementation of two sets of margin and handling fee standards are sufficient to illustrate.

"In order to ensure the safe and stable operation of the pig futures market, promote the market to gradually play its functions and effectively serve the industry, the Taishang exchange has strictly designed parameters including price limit, margin, position limit, trading limit, etc., and formulated a plan to unilaterally increase the guaranteed gold price when there is excessive fluctuation, so as to effectively prevent and control market risks." The relevant person in charge of Dashang also pointed out.

According to news from Xinhu futures, on the day of listing, Shanghai Xinhu Ruifeng Financial Services Co., Ltd., a wholly-owned risk management subsidiary of the company, also participated in the call auction of the main 2109 contract, and the transaction was successfully completed at the opening price. This is the OTC hedging transaction of four pig "insurance + futures" projects jointly conducted by the company and several insurance companies.

Generally speaking, the core data on the first day of listing fluctuated within the normal range. After the price effectiveness is recognized by the industry, the size of its position will be further increased.

Price effectiveness verified

The rise on the first day of listing is known as "a good start", but only when the first day of pig futures falls, and is a big drop, is enough to explain the effectiveness of futures prices.

On January 6, the price of 110 kg standard weight pigs in various provinces and cities in China was generally between 34.8 yuan / kg and 38.4 yuan / kg, with a median value of 36.6 yuan / kg. According to the data tracked by Zhuo Chuang information, on January 7, 2021, the pig price in Henan Province was about 36 yuan / kg.

This represents the current spot price of pigs, while the contract listed on January 8 closest to delivery represents the price of pig futures delivered in September this year.

In addition, the current domestic pig inventory has been steadily rising, and the strong expectation that the pig price will fall in the second half of the year, the stock exchange has carried out a discount treatment when setting the benchmark price for listing, which shows the characteristics of "the longer the time, the lower the price".

Among them, 2109 contract was 30680 yuan / ton, 2111 contract was 29680 yuan / ton, 2201 contract was 28680 yuan / ton, which was equivalent to a discount of 5320 yuan / ton for contracts delivered in September compared with spot price.

Even so, the price of more than 30 yuan / kg is still considered as a high level in the industry.

"The probability of slow decline of pig price is large. It is estimated that in September 2021, the pig price in Henan will be about 25 yuan / kg. The benchmark price of 2109 contract announced by DCE is 30680 yuan / ton. As the benchmark price is higher than the general expectation of the market, the first listing day of pig futures may fall. " Everbright futures agricultural products research team pointed out.

Other futures research institutions hold similar views and give the first day trading strategy of "short on high". The difference is only the difference between the main 2109 contract and the safer 2111 contract and 2201 contract.

It can also be seen from the open position data released by the Taishang exchange on January 8, that the main seats present a very consistent short formation. On that day, among the top 20 seats, the number of empty orders reached 10727, while the number of multiple orders was 6475. Short positions were very concentrated.

Among them, COFCO and Huatai were the most prominent, with 2607 and 1467 new empty single positions on that day.

Although from the perspective of historical experience, unexpected trends often occur when the market forms consensus expectations, it is an indisputable fact that the amount of live pigs on hand gradually recovers. The evolution of the relationship between supply and demand and the existence of futures delivery link will eventually pull the futures price back to be consistent with the spot price.

This is obviously not good news for the breeding enterprises, only through the futures market to lock in sales profits in advance. However, the "technical" problem that needs to be solved urgently is that pig futures need more market capacity.

According to the 18000 positions on January 8, the total position of pig futures is less than 300000. It should be noted that the average pig sales volume of muyuan shares will reach 1.5 million in 2020.

Therefore, in the next step, on the basis of ensuring the smooth operation of pig futures, the urgent need of pig breeding enterprises can be solved by increasing the market scale, which may be a long-term and slow process.