January 16, 2020 / 9:59 AM / 5 days ago

China launches rapeseed meal options on Zhengzhou exchange

SHANGHAI (Reuters) - China launched rapeseed meal options on the Zhengzhou Commodity Exchange on Thursday, the exchange’s third agriculture options contract, in efforts to provide more hedging instruments in the agricultural space.

The Zhengzhou Commodity Exchange’s most active May 2020 rapeseed meal options contract, for an exercise price of 2,300 yuan ($334.36) per tonne, had a call option at 54 yuan per tonne and put option at 80.50 yuan per tonne on Thursday.

The exchange’s most-traded rapeseed meal futures contract for May 2020 delivery CRSMcv1, which gained 13.4% last year, closed 0.5% higher at 2,271 yuan per tonne on Thursday.

In commodity derivatives trading, options give the buyer the right, but not obligation, to buy or sell a futures position at a specified price.

China, a key rapeseed meal consumer, has diversified rapeseed meal imports from markets such as Russia, Kazakhstan and India over the past year in an effort to reduce reliance on U.S. soybeans.

It typically buys U.S. soybeans to process into soymeal, a key ingredient in animal feed, to supply its livestock industry, but began diversifying sources of protein used in animal feed following a trade dispute between Beijing and Washington.

Rapeseed meal is the second most-used protein feed in China after soymeal, according to a statement from the Zhengzhou exchange on Thursday, adding that a growing aquaculture market in China would also increase demand for rapeseed meal feed.

The Zhengzhou exchange had earlier launched purified terephthalic acid (PTA) and methanol options in December.

Reporting by Emily Chow; Editing by Alex Richardson

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