Rapeseed meal is used in combination with soybean meal as an animal feed, particularly for poultry and livestock. It is high in protein and can help to support growth and development of plants by constituting fertilizers such as nitrogen, phosphorus, and other important nutrients.
Additionally, from the fish industry, increased demand has also led to the need for aquafeed, which also partially contain rapeseed meal.
With the various avenues of the ingredient, it is estimated that in 2022, China imported approximately 2 million metric tons of rapeseed meal.
ZCE Product Launch Updates
On Jan 12, 2023, ZCE internationalised three products for trade, which was Rapeseed Meal, Rapeseed Oil, and Peanut Kernel. While the products are relatively new, the past 2 months have shown relatively stable performance under the support of both local and overseas investors.
ZCE welcomes all different types of customers to take part in the trade for oil, oilseed, and peanut kernel products.
To maintain the smooth facilitation of trading processes and other functions, the exchange is also looking into more efficient, safer risk management tools. This is likely to help international participants leverage the market and meet cross-border hedging demands.
Distinctive characteristics
In comparison to other products, some of ZCE’s products may possess a comparative advantage. For example, rapeseed meal contracts have high liquidity, and highly active rapeseed oil and rapeseed meal trading. which allows more participants to trade in the product easily in comparison to rapeseed meal contracts from the International Continental Exchange (ICE).
Other than liquidity, on a macro scale, China’s products also reflect unique underlying characteristics. From the west, Intercontinental Exchange (ICE) is the predominant benchmark, while exchanges from the east such as Zhengzhou Commodity Exchange (ZCE) offer a good representation of demand and supply dynamics.
Besides, based on FIA 2022, China’s contract occupied every spot in the world’s top 10 agricultural futures and options contracts by volume, while rapeseed oil and meal reflect the 2nd largest spot market.
While gaining exposure to the Chinese market, it will also be important to consider different segments of market themes that cause price fluctuations. Some of these factors include industrial chain structures, production, imports, the size of the spot market, or onshore and offshore influences.
For the peanut kernel market, the product is the only one of its kind worldwide. The launch of an internationalised peanut kernel futures fills the gaps by introducing a management tool for the peanut industry. This is especially important as China is the biggest producer and importer, which enables ZCE’s peanut kernel to remain an authoritative price guidance benchmark.
In 2022, global production was at an estimate of 50 million tons. Similarly, peanut kernel futures boast high liquidity and smooth delivery as rapeseed oil and meal does. With rules evolving continuously, brand new risk management instruments will be introduced to the industry.
Are there actions taken to further facilitate offshore investors to participate?
At present, to open an account, clients can choose to trade through a variety of options including, an Offshore intermediary brokerage form, Offshore (Qualified Foreign Investor Scheme) QFI, or trade directly with local Chinese brokerage such as Shanghai Orient Futures.
All requirements by the CSRC, as well as local guidelines, are followed strictly, and the exchange is actively seeking feedback to further facilitate offshore investors trading into the market. The exchange is currently looking into streamlining processes that will scale up investor confidence and trade into the domestic economy.
For both short term and long-term trading strategies, these measures are likely to open more routes for trade.
Will ZCE consider bonded delivery or introduce more internationalised products?
ZCE determines the release of products based on trading habits and requirements. Based on the market status as of date, it does not support offshore client delivery. However, if traders are seeking certain trade requirements, do contact ZCE, more surveys and analysis will be needed to determine if the demands are prevalent.
For the release of more internationalised products, it will continue to follow CSRC requirements as per market demands. Products are released on a solid internationlisation basis and there must be a strong reason to internationalise them. There are no immediate plans to launch products, but ZCE is likely to continue tracking relevant futures products as well as the performance from QFI.
In either case, it is advised that if traders share inputs for the immediate response and consideration from the exchange.
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG).
We provide premium customer service at an affordable cost to all our clients. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.
