In recent years, the price of feed raw materials has continued to rise, which has greatly reduced the profits of domestic breeding enterprises, and the production and operation of enterprises are facing uncertainty.Under this circumstance, the futures market provides industrial enterprises with rich and flexible risk management tools, which greatly improves the aquaculture industry's ability to resist price risks.
Recently, the “DCE·Industry Bank Derivatives Service Enterprise Risk Management Series Activities” supported by DCE, the egg special session and the live pig special session were successfully held online by CITIC Futures and Huatai Futures respectively. , new models of industry-finance integration, etc. were shared, providing new ideas for the aquaculture industry to use futures and derivatives to strengthen risk management and empower, ensure supply and stabilize prices.
Futures tools give laying hen farming enterprises "reassurance"
Li Xingbiao, deputy director of CITIC Futures Research Institute, analyzed the fundamentals of eggs.He said that since the second half of 2019, the price of laying hen feed has continued to rise. Since March this year, affected by the situation in Russia and Ukraine, the global grain price has soared, and the supply of domestic corn and other grains has been tight. The price of laying hen feed has exceeded the previous high. Profit margins narrowed.
Li Xingbiao believes that from the perspective of supply, the production inventory in the first quarter of this year has slowly increased from a historical low, and the industry has experienced a transition from "high feed cost restraint" to "high egg price profit-driven".At the beginning of the year, under the high feed cost, farmers were less willing to supplement the pens; in the second quarter, with the rise in egg prices, breeding returned to the profitable range, and the enthusiasm for breeding increased.From the perspective of demand, in March and April this year, due to the epidemic situation in some areas, the mood of residents hoarding goods made the inventory of egg production and sales areas rapidly depleted, driving up egg prices; after the Dragon Boat Festival, the holiday demand ended, the epidemic situation in many places gradually eased, and logistics resumed. And into the rainy season, egg prices fell.
Chen Tianpeng, deputy general manager of Beijing Agricultural Union Zhongxin Asset Management Co., Ltd., shared the case of off-market egg options.At this stage, a company has egg liquidity inventory and is worried about the price drop, but believes that the decline is limited, and the price correction is very likely due to the impact of expected consumption.Therefore, the company can short-sell the value through three collars, buy a put option with a strike price of 4,700 yuan, and simultaneously sell a call option with a strike price of 5,150 yuan and a put option with a strike price of 4,550 yuan, so as to hedge the premium payment and achieve Low-cost or even zero-cost transactions.Chen Tianpeng also shared the low-cost purchase plan of corn feed raw materials. On June 15, 2022, the corn futures 2209 contract price is 2,900 yuan, and companies can buy call options with an exercise price of 2,960 yuan. The expiration date is two months later. .If the closing price on the expiry date is higher than 2,960 yuan, the company can exercise the option to purchase at 2,960 yuan, otherwise, the company can exercise the right and purchase at the actual market price.
Liang Chengqiang, manager of the strategic development project department of Guangdong Yihao Food Co., Ltd. believes that with the acceleration of the development of the laying hen industry, the number of local scale farms will increase, and the group scale farms will be further improved and full.From the perspective of the industry, he shared the company's hedging conditions, including correct fund management, perfect accounting and professional counseling teams.Liang Chengqiang believes that small and medium-sized households need to find professional team guidance, and large-scale enterprises need to form a professional research and investment team."For large-scale enterprises with abundant funds and professional management, they can carry out buying hedging of feed raw materials corn and soybean meal futures and selling egg futures; Limited risk' off-market options; for small farmers and cooperatives with a breeding scale of less than 50,000, they can choose to participate in the 'insurance + futures' project with policy subsidies, easy to understand, convenient participation, fixed costs, and guaranteed compensation. Relying on the futures market, various aquaculture enterprises can reduce the dual business risks of rising cost prices and falling product prices through a participation model suitable for their own scale, and ensure the long-term and stable development of the enterprise." Liang Chengqiang said.
To cope with the pig cycle, companies need to make good use of futures tools
According to a reporter from Futures Daily, since last year, relevant state departments have successively issued relevant documents such as "Improving the Government's Pork Reserve Adjustment Mechanism and Doing a Good Job in Maintaining Supply and Stable Prices in the Pork Market", "Opinions on Promoting the Sustainable and Healthy Development of the Live Pig Industry" and other related documents. The development of live pig enterprises helps the pig market to stabilize production and supply.The No. 1 Central Document in 2022 pointed out that "stabilizing the long-term support policy for live pig production, stabilizing the basic production capacity, and preventing the production from fluctuating and falling", it also set the policy tone of "two stability" for live pig production.On June 28, the National Development and Reform Commission also stated that it will strengthen the control of live pig production capacity to prevent price fluctuations.
"From the current situation of live pig production, the ability of my country's pig enterprises to ensure supply and stabilize prices has been greatly improved." Shi Shouding, deputy director of the pig industry branch of China Animal Husbandry Association, introduced that from the perspective of the number and scale of development of pig farms in my country, as of 2021 At the end of the year, there were 2,303 national-level pig standardized demonstration farms, and 109 new ones will be added in 2021; from the perspective of the supply capacity of fattening pigs, the year-on-year growth rate of piglet plus fattening pig sales in large-scale breeding farms in my country will increase from 13% in 2020 to 2021. In the first five months of 2022, it will reach 42% year-on-year; in terms of market share of large enterprises, in 2021, the top five enterprises in my country will sell more than 90 million live pigs in total, accounting for a share of the country's total live pigs. 13.4%, the influence of large-scale pig breeding enterprises on pig prices has increased significantly.
After the industry reshuffle in recent years, in general, the concentration of my country's pig breeding industry has increased significantly, but the risk of cyclical fluctuations in pig prices faced by the operation of pig enterprises still exists.
According to Shi Shouding, affected by the sharp decline in live pig prices in 2021, the pressure on the performance of domestic pig enterprises has increased sharply, and only 2 of the 12 top listed pig enterprises are profitable.Entering 2022, when the price of live pigs bottomed out in the first quarter, according to the data monitoring of the China Animal Husbandry Association, the profit of large-scale farms from January to April this year was -297 yuan per head.
"The sharp fluctuations in pig prices and raw material prices have become the biggest risk faced by the development of my country's pig breeding industry." In this regard, Shi Shouding said that the country should increase policy support for the pig industry, do a good job in pig price monitoring and early warning, and strengthen during the cyclical trough. While providing financial support to enterprises, enterprises should do a good job in epidemic prevention and control and environmental protection, continuously improve efficiency and reduce costs, and deal with the risk of cyclical price fluctuations through the layout of the entire industry chain. , learn and master the corresponding financial tools to control and manage risks.
Over-the-counter options provide a richer means of risk management for pig companies
The reporter learned that since last year, under the background that the spot price of live pigs has fluctuated wildly and the pig enterprises have fallen into losses, the listing of pig futures of DCE has played an important role in helping the industry to avoid the risk of falling pig prices.
According to Zhang Xuesong, head of the current department of Bangxing International Trade Period in Zhangjiagang Free Trade Zone, the participation of enterprises in hedging can solve the two core problems of enterprise operation, one is to achieve price management, and the other is to achieve scale management.From the current point of view, my country's live pig futures are gradually becoming a "catalyst" for the growth and expansion of the industry, which not only improves the operational efficiency of related entities, but also significantly increases the sensitivity of the entire industry to price changes.
On the basis of pig futures, Jiang Hao, director of the product design department of Huatai Great Wall Capital Management Co., Ltd., also said that off-farm options for pigs have also become one of the important tools to assist pig enterprises in smoothing the profit curve, providing enterprises with more abundant Risk management means, the operation is also more simplified.
Jiang Hao further gave an example of the company buying put options to protect the selling price of live pigs.He said that if a breeding company sells 1,000 tons of live pigs, but the company expects that the price of live pigs will be very uncertain in the future, it wants to avoid the risk of falling prices and does not want to give up the opportunity to raise prices.In this case, the company can spend a small amount of money to buy out-of-the-money put options as insurance, and there is a chance to make more profits without guaranteeing no losses."Take the pig 2209 contract as an example, the initial target price is 20,000 yuan / ton, assuming that the breeding enterprise has a profit of about 1,500 yuan / ton of pig breeding at the current price, the enterprise can buy 1,000 tons of exercise price of 19,000 yuan / ton For the put option, the premium payment is 400 yuan/ton. After the expiration, if the disk price is less than 19,000 yuan/ton, the company will receive the price difference. After deducting the premium, the overall income of live pig sales is locked at 18,600 yuan/ton, and the breeding is still profitable. ; If the disk price is greater than 19,000 yuan / ton, the company only loses the royalties, and the farming is still profitable, and the higher the sales price, the greater the profit." Jiang Hao said.
In addition, Jiang Hao also said that the trade with rights allows the upstream to sell at a guaranteed reserve price and the downstream to purchase at a capped price.Suppose a trader wants to sell live pigs to a downstream meat processing factory one month later. The current contract price of live pig 2209 is 20,000 yuan/ton. After one month, if the disk price is higher than 20,000 yuan/ton, the actual selling price is 20,000 yuan/ton. Tons + spot premiums and discounts + 800 yuan / ton, if the disk price is lower than 20,000 yuan / ton, the actual selling price is the disk price + spot premiums and discounts + 800 yuan / ton.In short, traders provide the downstream with a "no rise in the event of a rise, and a fall in the event of a fall".At the same time, traders can buy call options with a strike price of 20,000 yuan/ton from the risk management subsidiary of the futures company, and the premium payment is 800 yuan/ton.In this way, traders use the risk management fees received from downstream to buy options, which can make up for the extra sales profits lost in the trading link in the future when the situation of "going up but not going up" occurs.
(Editor in charge: Zhang Haijiao)
