February 6, 2018 / 2:35 AM / in a year

CORRECTED-UPDATE 1-China securities regulator approves launch of hog futures - exchange

(Corrects official’s affiliation in 2nd paragraph to Dalian exchange, not securities regulator)

* Details of Dalian exchange contract still to worked out

* Contract to allow hedging against volatility - exchange

BEIJING, Feb 6 (Reuters) - China’s securities regulator has approved an application from the Dalian Commodity Exchange to launch a hog futures contract, the exchange said in a statement late on Monday, paving the way for major changes to trading in the world’s top pork market.

Details on the type of contract and timing for the launch have yet to be decided, an official at the exchange told Reuters.

The exchange has spent more than a decade researching the feasibility of hog futures, which will complete Dalian’s hedging offering for the whole meat industry supply chain, including soybean, soymeal and corn futures. It submitted a formal application to operate a live hog contract early last year.

The hog futures approval also comes ahead of a long-awaited crude oil futures contract, for which regulatory approval is expected soon.

China consumes about 55 million tonnes of pork a year, half of the global total, but production is highly cyclical. Futures will help pig farmers hedge the risks of price swings in the highly volatile market, the exchange said in its statement.

Rapid industrialisation in pig farming in China is giving way to larger, more standardised producers, which will make it easier to develop a contract based on the live animal.

Around 200 companies were producing more than 50,000 hogs a year in 2016, it said, about 8 percent of the national output.

The Dalian exchange will still need a final go-ahead from the State Council, or Chinese cabinet, before commencing trading. (Reporting by Hallie Gu and Dominique Patton Editing by Shri Navaratnam and Kenneth Maxwell)

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