Recently, a risk management training course for Hebei's supply and marketing cooperatives was held in Shijiazhuang, Hebei Province. This course was jointly organized by the Hebei Provincial Federation of Supply and Marketing Cooperatives and the Zhengzhou Commodity Exchange, and undertaken by Hebei Provincial Agricultural Production Materials Group Co., Ltd. and Guantong Futures Co., Ltd. More than 100 representatives from local agricultural materials related enterprises, cotton and linen enterprises, and investment companies in Hebei attended the training.
According to Futures Daily reporters, this training course invited renowned scholars and senior experts from the industry. They shared the latest market trends, risk management strategies, and practical experience, covering topics such as leveraging the functions of the futures market, using futures and derivatives for stable business operations, building internal control systems for futures companies, and implementing futures trading strategies.
Li Qiang, a doctoral supervisor of finance at Northeastern University of Finance and Economics, introduced in the training class that traditional business models are becoming increasingly difficult to profit from in the age of information. Business operations are increasingly reliant on scale and the integration of industry chain resources. However, industry chains are often vertically integrated and related to bulk commodities, increasing operational risks. A relatively stable business model for enterprises is the combination of futures and spot trading, which is also an important guarantee for the sustainable development of enterprises.
“State-owned enterprises can manage risks related to prices, foreign exchange, interest rates, credit, and climate in their business operations through futures and derivatives trading, ensuring the healthy and stable operation of the enterprises,” said Sun Chengyan, operations director of Yitong Digital Technology Co., Ltd. She added that state-owned enterprises are the pillars of China's national economy, and some state-owned enterprises are also important players in the international market. The business activities of state-owned enterprises directly affect the prices of related products. Only by allowing state-owned enterprises to participate in the futures market and transmitting relevant economic information to the market can the price discovery function of the futures market be truly brought into play, ultimately enhancing the international pricing power of related products.
Fu Ru Jian, general manager of the spot trading strategy department of Henan Tongzhou Cotton Industry Co., Ltd., provided a detailed explanation and sharing from three aspects: the construction of internal control mechanisms for enterprise hedging, enterprise risk hedging models and strategies, and enterprise risk hedging cases. He stated that the construction of hedging internal control mechanisms includes several aspects: business process standardization, job responsibility standardization, and power constraint institutionalization. In addition, he used cases to illustrate how enterprises can use futures and options to hedge risks, and how to use options to reduce inventory costs.
Li Chenyi, the financial department manager of Jiangyin Jinqiao Chemical Co., Ltd., introduced three models of combining futures and spot trading: hedging, basis trading, and option-embedded trading. “Hedging allows enterprises to maintain stable operations without bearing the risks associated with absolute price fluctuations but instead managing basis risk. Basis trading has advantages such as low risk, diverse pricing, scalability, and reproducibility. Enterprises can optimize inventory and procurement costs and gain from basis fluctuations through basis trading,” said Li Chenyi.
“This training course aims to help enterprises in the supply and marketing system understand and master the basic knowledge of the futures market, improve risk management capabilities, and provide support for the stable development of enterprises,” said Ma Zhaohui, chairman of Hebei Xinhe Cooperation Holdings Group. He noted that in the current context of economic globalization and increasingly fierce market competition, enterprises face unprecedented market risks, and risk management has become a key factor for the stable development of enterprises. Futures, as an important risk management tool, presents both challenges and opportunities for enterprises. Hebei's supply and marketing enterprises, as an important force connecting urban and rural areas and serving agriculture, need to strengthen their risk management awareness and improve their risk management capabilities to cope with the complex and changing market environment.
As an important component of the financial market, China's futures market, after more than 30 years of development, has increasingly sophisticated varieties and tools, consistently high trading volume, and growing price influence. It has the capacity to support the high-quality development of the real economy.
According to Futures Daily reporters, the total number of futures and options contracts across the market currently stands at 133, with the Zhengzhou Commodity Exchange listing 25 futures and 18 options contracts—the largest number in the market. The Zhengzhou Commodity Exchange's listed products cover several key national economic sectors, including grain, cotton, oil, sugar, fruits, chemicals, building materials, and metallurgy. In recent years, the scale and variety functions of the Zhengzhou Commodity Exchange have performed steadily. Taking cotton futures as an example, after 20 years of development, cotton futures have become an indispensable tool for the cotton textile industry, and the “futures price + basis” pricing model has been widely accepted by the industry. The futures market has continued to develop positively in recent years, not only achieving reasonable quantitative growth but also effective qualitative improvements, providing solid support for enterprise risk management and laying a strong foundation for serving the high-quality development of the real economy.
The Zhengzhou Commodity Exchange has always adhered to the principle of “market first” and the philosophy of “keeping the trouble to ourselves and providing convenience to the market,” adopting multiple measures to support the high-quality development of the industrial chain. For example, to support the stable supply and price of chemical fertilizers, the Zhengzhou Commodity Exchange has supported chemical fertilizer storage enterprises in using urea futures to hedge against price declines, implementing a “worry-free storage” pilot program for urea for four consecutive years, providing support for 2.5 million tons of urea for 53 (times) storage enterprises. Also, for central enterprises, state-owned enterprises, supply and marketing enterprises, and listed companies, the Zhengzhou Commodity Exchange has continuously carried out multi-level and multi-dimensional customized training in recent years. A relevant official from the Zhengzhou Commodity Exchange introduced that the exchange has already established contacts with many local supply and marketing systems and will successively provide customized and targeted training courses.
In addition, a relevant official from the Zhengzhou Commodity Exchange stated that the new “Nine Articles on the National Economy” propose that the capital market must firmly grasp the theme of high-quality development and provide stronger support for key national economic sectors and the construction of a modernized industrial system. China's supply and marketing system is an important part of China's socialist agricultural economic system and has gradually become the backbone force of agricultural socialized services, the leading force in modern agricultural circulation, and the driving force behind farmers' professional cooperatives. Hebei agricultural materials and Hebei cotton and linen, as backbone enterprises of the Hebei Provincial Federation of Supply and Marketing Cooperatives, hold leading positions in the agricultural materials and cotton textile industries and are closely related to the Zhengzhou Commodity Exchange's urea and cotton products. The Zhengzhou Commodity Exchange always attaches importance to leveraging the power of futures trading, striving to provide the market with better quality, more efficient, and more professional services, jointly promoting the growth and development of enterprises and contributing to the high-quality development of the Hebei economy.
