Credit: REUTERS/CHINA STRINGER NETWORKAug 8 (Reuters) - China's soybeans and soyoil options made their debut trade on the Dalian Commodity Exchange on Monday, as the world's biggest commodity buyer looks to provide more hedging tools and improve its pricing power.
Domestic investors can now trade options for both of Dalian's No. 1 soybean and No. 2 soybean contract, for non-GMO and GMO soybeans respectively, as well as its soyoil contract.
The exchange had already begun trading soymeal options trading in 2017.
"I think there will be good interest in the soybean oil options. The soybean meal options have been around for several years, so soybean oil options would be a complimentary product for traders looking to hedge crush margins or bet on the relative values of the two products," said Darin Friedrichs, co-founder of Sitonia Consulting.
"The options on No. 1 and No. 2 soybeans are probably going to get less attention, simply because they are smaller and less liquid markets."
Open interest and trading volumes for the No. 1 soybean options stood at 4,553 and 6,374 lots respectively at the close, while No. 2 soybean saw open interest and trading volumes of 1,023 and 1,156 lots.
Soyoil options meanwhile saw open interest and trading volumes at 2,143 and 3,153 lots.
China, the world's top importer of soybeans and top consumer of edible oils, has been gradually increasing its number and variety of commodities derivatives. It has also opened up some of its contracts to overseas participants in a push to increase its pricing power.
Options give traders the right to buy or sell a futures position at a specified price, which can help them manage their price exposure.
(Reporting by Emily Chow in Kuala Lumpur; editing by David Evans)
((emily.chow@thomsonreuters.com; +862120830020; Reuters Messaging: emily.chow.thomsonreuters.com@reuters.net))
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