The provincial Party committee and provincial government have repeatedly expressed their support for the reconstruction of Zhengzhou Commodity Exchange's advantages, the aggregation of financial and industrial resources, and the comprehensive improvement of its ability and effectiveness in serving the real economy.
In recent years, Zhengzhou Commodity Exchange has given full play to the functions of futures price discovery, risk management, and resource allocation, improving a diversified and serialized product system to help enhance the resilience of the industrial and supply chains. This newspaper specially launches a series of reports on "How futures tools chain the real economy", recording the exploration and practice of Zhengzhou Commodity Exchange in continuously improving its comprehensive service capabilities, driving the extension and upgrading of industrial and supply chains, and promoting high-quality economic development.
Behind the cotton industry cluster chain lies the combined innovation of the cotton industry and cotton futures.
Henan's cotton yarn and garment production have ranked among the top in the country for many years, with a significant advantage in industrial clusters. The textile and garment industry chain is one of the 28 100-billion-level modernized industrial chains that our province is striving to build.
As an important textile raw material, the price of cotton is easily affected by various factors such as climate, output, imports, consumption, reserve policies, and the international market. "Over the years, the trend of cotton prices has been volatile, with prices ranging from about 10,000 yuan per ton when low to about 30,000 yuan per ton when high. The sharp fluctuations in cotton prices not only affect enterprises along the entire industrial chain, but may even impact the stable development of the textile and garment industry." said Wang Wei, a senior analyst at Zhongyuan Futures, on July 23rd.
On June 1, 2004, cotton futures were listed on the Zhengzhou Commodity Exchange, creating favorable conditions for enterprises to discover cotton forward prices and conduct hedging." Wang Wei believes that cotton futures play a very important role in the pricing of China's cotton market, and also enhance China's cotton industry's influence and voice in the international market.
After the listing of cotton futures, cotton trading methods have changed significantly. "It is precisely through the use of futures and options tools provided by the Zhengzhou Commodity Exchange that Tongzhou Cotton's trading scale and efficiency have been able to continuously improve, gradually developing into one of the leading large-scale cotton-related enterprises in China." said Huang Hongyu, president of Henan Tongzhou Cotton Industry Co., Ltd.
In the year cotton futures were listed, Tongzhou Cotton used cotton futures hedging to effectively avoid the risk of falling spot prices; through basis trading, it achieved relatively stable operating efficiency during periods of large price fluctuations. Currently, more than 80% of Tongzhou Cotton's spot trading uses futures and options tools to hedge risks, and the application of futures tools has been integrated into various aspects of the company's daily operations.
With the support of cotton futures, Tongzhou Cotton continues to extend and strengthen its industrial chain. Huang Hongyu introduced that Tongzhou Cotton invests in cotton planting and high-quality cotton production bases in Xinjiang, acquires and reorganizes many downstream textile enterprises, and sets up branch offices in several countries such as the United States, India, Vietnam, and Indonesia, using the "Zhengzhou price" to build a global import and export international trade chain.
The cotton industry has a very long industrial chain, involving many links such as cotton planting, acquisition and ginning, circulation trade, yarn processing, and garment manufacturing. Currently, the enthusiasm of cotton-related enterprises in Henan for using futures tools is relatively high, with 95% of large and medium-sized textile and cotton trading enterprises actively embracing the futures market. Professional futures business teams have become a "standard configuration" for many cotton-related enterprises, and pricing transactions, basis transactions, and hedging have become winning "magic weapons" for avoiding operational risks.
Cotton is an important bulk agricultural product, and its industrial development is related to national interests and people's livelihood. The continuous increase in trading and open interest data shows the continuous expansion of the cotton futures market in the past 20 years, which has not only provided effective risk management tools for enterprises in the cotton industry chain, but also further enhanced the safety and competitiveness of the industry chain. "Cotton futures have become an indispensable tool for cotton-related enterprises." said Ji Guangpo, chief expert of Shanghai International Cotton Exchange, who participated in the research and development of cotton futures.
Since the listing of cotton futures, Zhengzhou Commodity Exchange has gradually introduced tools for PTA, cotton yarn, short fiber, and PX, actively building a textile product derivatives trading center with a rich variety of products and tools. Enterprises have a wider range of tools available. Relevant persons in charge of Zhengzhou Commodity Exchange stated that Zhengzhou Commodity Exchange will continue to promote the functioning of cotton futures, improve a multi-level cotton-related futures and derivatives system, and serve the high-quality development of the industry.
