SOYBEAN MEAL FUTURES TRADING MANUAL DCE Investor Education Material Futures Trading Manual Series
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SOYBEAN MEAL FUTURES TRADING MANUAL DCE Investor Education Material Futures Trading Manual Series Dalian Commodity Exchange SOYBEAN MEAL FUTURES TRADING MANUAL Distribution of DCE Members By Dec. 31, 2015 3 Heilongjiang 5 Jilin 2 23 8 Liaoning Xinjiang 1 Beijing Inner Mongolia 1 6 Hebei Tianjin Ningxia 4 1 Shanxi 3 Qinghai 1 Shandong 3 3 Gansu 13 Shaanxi Henan Jiangsu 28 Tibet 3 2 Shanghai 3 Anhui 5 Hubei Sichuan Chongqing 13 Zhejiang 3 1 Hunan Jiangxi Guizhou 5 Fujian 2 Taiwan Yunnan Guangxi 23 Guangdong H.K. Macao 2 Hainan SOYBEAN MEAL FUTURES TRADING MANUAL CONTENTS I. Soybean Meal Contract Overview 1 II. Production, Distribution and Consumption of Soybean Meal 2 III. Major Factors Influencing Soybean Meal Price 4 IV. Measures of Risk Management of Soybean Meal Futures Trading 7 V. Procedures and Relevant Rules for Delivery of Soybean Meal Futures 9 Annex 1: DCE Soybean Meal Futures Contract 14 Annex 2: DCE Soybean Meal Delivery Quality Standard 15 Annex 3: List of Designated Delivery Warehouses for DCE Soybean Meal 16 Annex 4: DCE Soybean Meal Price Daily Chart 17 I. Soybean Meal Contract Overview Soybean meal is a by-product of soybean oil extraction. There are two types of soybean meal: single leaching soybean meal and dual leaching soybean meal. The first is the by-product after soybean oil extraction by way of leaching, and the latter is the by-product after soybean oil extraction by way of crushing and leaching. China’s soybean meal market is dominated by single leaching soybean meal, as it is more sophisticatedly processed and richer in protein. Soybean meal is generally irregularly-shaped flakes, pale-yellow or light-brown-colored, and smells roasted soybeans. Among the 12 oil meal feeds including cottonseed meal, peanut meal and rapeseed meal, soybean meal is the one with the largest production and the widest application. As a raw material rich in protein, soybean meal is not only a major component of livestock and poultry feed, but also used in pastries, healthy food and cosmetics, as well as in making antibiotics. Besides, aqua-cultural need of soybean meal has been increasing rapidly in recent years. With the advancement of science and technology, soybean meal will be put into even wider use. Use of Soybean Meal in Feed Industry (%) 29% Hogs 7% Cattle Poultry 52% 6% Cows 2% Food Industry 2% Pets 2% Others Source: Soybean Infosource As an important source of vegetal protein, soybean meal is characterized with fluctuating price, long industrial pipeline, numerous engaging companies and widespread influence, provoking strong hedging and investment needs among relevant companies. Through the successive launches of soybean, soybean meal and soybean oil contracts, DCE offers a comprehensive portfolio and a perfect hedging system of soybean-relevant products, providing a handy and all-round hedging venue for relevant companies. 1 Soybean Meal Futures Trading Manual II. Production, Distribution and Consumption of Soybean Meal 1. Production Soybean meal is primarily produced in the U.S., Brazil, Argentina, China, India and the E.U. China currently produces over 29% of the world’s total soybean meal. In recent years, with the rapid development of China’s crushing industry, China’s production of soybean meal maintains an annual growth rate of approximately 20%. China is one of the major producers of soybean meal. China’s annual output of soybean meal reached 15 million tons in 2000, and maintains rapid growth rate since 2001. In 2009, China overtook the U.S. as the world’s largest soybean meal producer. At the same time, China’s soybean meal production landscape changed drastically. Before mid 1990s, the three provinces in northeast China were the country’s major soybean meal production bases, producing over 60% of the country’s total. However, the position has been taken over by coastal regions such as Shandong, Jiangsu and Guangdong, as oil extraction plants in the coastal areas have been thriving since 2002. Output of the World’s Largest Soybean Meal Producers 1999/00-2015/16 Unit: 1,000 tons Country 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11 / 12 12/13 13/14 14/15 15/16 Argentina 13,712 13,718 16,559 18,663 19,761 21,601 25,012 26,061 27,071 24,363 26,624 29,312 27,945 26,089 27,892 30,928 33,400 Brazil 16,478 17,725 19,407 21,449 22,450 22,740 21,920 24,110 24,890 24,700 26,120 28,160 29,510 27,310 28,540 30,890 30,960 China 11, 9 7 5 15,050 16,300 21,000 20,190 24,026 27,296 28,465 31,280 32,475 38,644 43,560 48,288 51,440 54,531 59,008 63,910 India 3,376 3,574 3,697 2,694 4,459 3,616 5,381 5,255 6,705 5,960 6,240 7,440 7,720 7,920 6,640 5,600 5,160 U.S. 34,102 35,730 36,552 34,649 32,953 36,936 37,416 39,037 38,359 35,473 37,836 35,608 37,217 36,174 36,909 40,879 40,564 E.U. 11, 4 0 7 13,310 14,243 13,123 11, 2 2 1 11, 4 0 8 10,904 11, 6 9 3 11, 8 0 8 10,223 9,950 9,633 9,668 10,398 10,614 11, 2 18 11, 6 9 0 Global 107,085 116 , 0 0 7 124,864 130,222 128,908 138,605 146,402 153,806 158,707 152,160 165,275 174,344 180,484 181,258 189,532 207,172 216,917 Source: U.S. Department of Agriculture 2. Consumption The world’s consumption of soybean meal leaps forward in recent years, and expects to achieve 215.19 million tons in the year of 2015/16. Currently the soybean meal takes up over 60% of the world’s total consumption of protein meal. The E.U. had been the world’s largest soybean meal consumer until 2008, and its annual demand remains around 30 million tons in recent years. In the year of 2008/09, China overtook the E.U. to become the world’s largest consumer of soybean meal, and its consumption stood at 62.08 million tons in the year of 2015/16. The global consumption of 2 soybean meal was propelled in part by the momentous growth of soybean meal consumption in East Asian countries such as China, Korea and Japan and Southeast Asian countries since 2004. Global Consumption of Soybean Meal 1999/00-2015/16 Unit: 1,000 tons Country 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 U.S. 27,289 28,363 29,545 29,096 28,531 30,446 30,114 31,166 30,148 27,898 27,795 27,489 28,614 26,308 26,804 29,243 30,209 Brazil 7,086 7,063 7,580 8,055 7,696 8,960 9,328 11,118 12,257 12,418 13,000 13,950 14,100 14,200 14,650 15,250 15,550 E.U. 29,419 30,910 33,657 33,594 32,982 32,893 33,126 33,525 35,432 31,836 30,359 30,952 29,670 27,042 28,392 30,142 31,642 China 12,562 14,995 15,204 20,157 19,547 23,437 27,776 27,630 30,849 31,673 37,546 43,382 47,435 50,091 52,534 57,471 62,080 Global 108,579 115,775 123,177 129,910 127,632 136,734 145,273 150,979 157,417 153,243 161,484 170,861 177,995 177,449 186,270 201,952 215,192 Source: U.S. Department of Agriculture Chinese residents’ intake of meat, eggs, poultry and fish increases significantly as their living standards improve, propelling the booming of feed processing industry. The rapid increase of feeds for poultry and quality lean hogs stimulates the demand for quality protein feeds. Meal products are various in China and the outputs of rapeseed meal and cottonseed meal are both large. However, as both kinds of meal cannot be used in feeds unless detoxified, the most widely used quality meal in China is soybean meal. In China, soybean meal is mainly consumed in the Pearl River Delta and the Yangtze River Basin, or to be specific, provinces and cities of Guangdong, Sichuan, Jiangsu, Hu’nan, Zhejiang, Jiangxi, Anhui, Hubei, Fujian, Beijing and Shanghai. 3. Export Argentina, Brazil, the U.S. and India are currently the largest soybean meal exporters in the world, with Argentina and Brazil ranking the top two. In the year of 2015/16, 71% of the world’s soybean meal export was from Argentina and Brazil, and around 16% from the U.S. India’s soybean meal export mainly goes to Southeast Asia, accounting for around 0.4% of the global export volume. The demand and supply landscape of soybean meal changed tremendously since mid 1990s. Before 1994, China was one of the major soybean meal exporters, with an annual export volume of over 1 million tons. However, as the domestic demand surged and the number of domestic soybean for oil extraction declined in the next several years, the production of soybean meal fell short of meeting consumption demands, making China one of the major importers.