Recently the China's Securities Regulatory Commission has approved the corn futures variety to be listed in Dalian Mercantile Exchange. As the first staple grain futures variety to be listed in stock exchange after futures markets

streamlined, the corn futures will be of significance in the reform of the grain distribution system in China and in the development of futures markets.

Corn futures is one of the varieties with a long history in the world's futures markets. In 1865 the Chicago Board of Trade, the world's first futures exchange, formalized corn trading by developing standardized agreements called futures contracts.

So far, 12 exchanges from eight countries have listed corn futures contracts and its related derived species. The corn contracts are powerful in price superiority among the staple grain futures including wheat, corn and soybeans.

At the first hearing, it seems that corn futures is far away from those who do not participate in corn trading. Actually, as a major commercial futures variety, corn futures may have links with people's lives.

Firstly, for a large number of farmers who grow corn, the functions of hedge and price discovery can not only provide the farmers with sowing and selling info references, but also guide leading enterprises to sign advance orders with farmers, help farmers to lock cropping benefits in advance, and boost farmers' income by market means. At the same time, there is a very long chain for the corn industry. With the economic development in China, corn has gradually turned from a grain ration variety to industrial materials. For the present, 80 per cent of corn has been used for processing fodder, starch, alcohol, and gourmet powder and for pharmaceutical industry. The processing enterprises with corn as raw materials can effectively avoid market risks in corn dealing and improve their market competitiveness by the way of hedge transactions. The State-run enterprises of grain collection and storage can make use of corn futures to enhance market risk management. The corn futures

transactions can also be applied to providing effective price signal for the State grain macro-control policy and boost the foreseeability for grain market controls and strengthen control results.

It is in this sense that the listed corn futures is not merely an added variety in futures, it embodies a further step in the market reform of grain distribution system in China.

It goes without saying that corn futures is of significance in the development of China's futures market. After screening and rectifying China's futures market in the later years of 1990s, the futures market is on the development way. Since the beginning of this year, the futures varieties including cotton and fuel oils have been approved to be listed on the market, which shows that futures market is facing a new development opportunity. As a second staple grain variety, the corn yields are close to 120 million tons annually. It has an important status and influence in the national economy. The transactions of corn futures will further enhance the people's understanding of the functions and influence of futures market so that the transactions will conducive to the improvement of futures market status in China's socialist market economy.

Surely, like any other financial varieties, there are some market risks in corn futures. Therewith related departments have expressed that regular adaptation capacity will be enhanced by adopting risk-control system and index and parameter system including guarantee sum, position-keeping quota and limit stock prices up and down. In this way, corn futures will insure to be in stable operation. We believe if all participants are strictly self-disciplined and abide by the norms, the market functions for corn futures will be brought into full play.

By People's Daily Online