Pork Futures Market to be Launched on 21st July

SOUTH KOREA - The Korea Exchange (KRX) plans to open trading of pork belly futures on the stock market, thus enabling consumers to purchase pork at equalised rates.
calendar icon 30 June 2008
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The stock market operator said it will launch the pork futures market on July 21 as financial authorities amended regulations concerning such trading.

Given that price volatility of pork is high, the exchange and regulators saw the need to facilitate the futures market where meat processors and warehouse operators as well as the pig-raising industry can hedge against price risks through forward contracts.

According to The Korea Times, currently, the pork market is the second biggest after rice in terms of production, and its price volatility exceeds that of the KOSPI 200 futures and treasury bonds with a three-year maturity.

Last year, its volatility rate was 27.2 percent, compared with 23.1 percent for the KOSPI 200.

The pork belly futures will be traded at the underlying average price of pork sold at nationwide retail and wholesale markets.

The Chicago Mercantile Exchange (CME), the world's leading futures market, is the biggest operator with a trading volume reaching 29,000 contracts per day. The CME opened trading in 1961, making it the first market to do so.

KRX CEO Lee Jung-hwan said, "With the sentiment worsening against beef in general, pork prices are soaring on strong demand. This is the chance to provide customers a market with a hedging device."

View The Korea Times story by clicking here.

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