By Wang Lan (China Daily)
Updated: 2007-08-15 11:16

Customers buy rice at a supermarket in Ningbo, East China's Zhejiang Province.

Zhengzhou Commodity Exchange (ZCE) said it is preparing for the launch of rice futures.

Zhang Jing, assistant to the general manager of ZCE, said: "Rice futures would be among the next futures products we are going to introduce in the years to come."

"Rice futures are in the research stage and the target date has not yet been decided," said Wei Zhenxiang, director of ZCE's research department.

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Industrial analysts said the introduction of rice futures would help stabilize the price movement in the spot market and provide guidance to the growers to arrange planting.

Mao Xiaofei, a senior analyst on agricultural produce futures at China International Futures Co Ltd, said the prospective rice futures means a lot to Chinese people, for rice is the most important staple for the Chinese and is always in great demand.

Figures compiled by China Oil and Food Net show the planting area for paddy this year is expected to reach 29.30 million hectares, up 0.7 percent from the year before, and the output is estimated to increase 3.32 percent to 186 million tons from a year earlier.

In the first six months of 2007, China's import of rice plummeted 36.3 percent to 238 thousand tons year-on-year and the export figure was 601,000 tons, remaining at the same level as a year earlier, according to statistics from the General Administration of Customs.

The average price of early indica rice has increased from 2,120 yuan to 2,360 yuan per ton since last year.

Industry analysts said the upcoming rice futures market would protect growers and traders from risks resulting from unpredictable price fluctuations caused by bad weather.

"A rice futures market may help establish a pricing system that may properly reflect the supply and demand situation in the spot market and provide the barometer for rice growers and traders," said Li Jingyuan, an analyst at Hai Fu Futures Co.

"The domestic pricing system would also strengthen China's links with the international rice market and increase the country's influence in price discovery in the global market," said Ma of China International Futures (Shanghai) Co.