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China Exchange to expand ag products

03/06/2012 @ 6:48am

The Dalian Commodity Exchange is considering launching a series of agricultural and resource futures products to help China's farm sector and boost the country's role in global markets, President Liu Xingqiang said Tuesday.

Liu said he has also called for the government to remove a longstanding ban on state firms trading in offshore futures markets and ease curbs on financial firms trading in domestic futures markets.

Conditions are now favorable for developing China's futures markets after senior leaders endorsed such development plans earlier this year, Liu said, speaking to reporters at a briefing coinciding with the annual meetings of China's parliament.

"We plan to step up our efforts to study and launch more agriculture futures products to better serve the agricultural sector as well as small businesses. The pace of the launch of agricultural futures products will also be faster," he said, noting that Beijing has called on the futures industry to better serve the agriculture sector.

The Dalian exchange already trades a number of agricultural futures products, such as soybeans, soymeal and corn, as well as chemicals and coke futures.

Liu, who is also a delegate to parliament, said farm products under study by the exchange include egg and live hog futures contracts.

"China accounts for half of the world's pork output, but we don't have any related futures products," he said.

He said hog futures present special hurdles such as quarantine requirements and delivery issues, adding that trading of this product has been under consideration for some time.

The exchange is also considering options on agricultural products, Liu said, without elaborating.

Dalian is also studying iron ore futures, which would give China, a major global consumer of iron ore, a stronger hand in the global iron ore market, Liu said.

A plan to introduce coking coal futures is also under regulatory review, and the exchange will seek public comments on those contracts, Liu said. Trading in these contracts should be launched this year, he said.

Liu also suggested that Chinese companies should play a more prominent role in global trading, and that a ban on offshore trading by state firms, put in place after a number of trading scandals, should be removed.

"China should encourage firms to trade on offshore markets," he said.

Curbs on financial institutions' participation in domestic futures markets should also be eased, he said.

-Amy Li contributed to this story; Dow Jones Newswires; (8610) 8400-7700; amy.li@dowjones.com

(END) Dow Jones Newswires

March 06, 2012 06:51 ET (11:51 GMT)

DJ UPDATE: China Dalian Exchange Considers Range Of New Futures Products->copyright

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