China launches apple futures

ZHENGZHOU - The world's first apple futures contracts started trading on the Zhengzhou Commodity Exchange in central China's Henan province Friday morning.

China is the world's largest apple grower and consumer, and its apple output and farms have been increasing over the past decade. In 2016, China had 2 million hectares of apple trees with an output of 43.88 million tons, accounting for 57 percent of global supply.

Fang Xinghai, deputy head of the China Securities Regulatory Commission, said it is the world's first fresh fruit futures contract and demanded the Zhengzhou exchange enforce strong supervision and risk management.

Apple cultivation is key to China's poverty alleviation campaign, as many of China's poor areas rely on apples as a major income source. Among the 122 key apple-growing cities and counties listed by the Ministry of Agriculture, 33 are designated as national-level impoverished counties.

Currently, apple prices are solely determined by the market, and farmers and enterprises are at the mercy of market price fluctuations.

The launch of the futures is expected to make prices more transparent and help growers hedge against price risks.

It is the task of the futures market to turn apples into a stable source of income for farmers in impoverished regions, Fang said.

"The purpose of launching apple futures is not merely to have a new product, but to help the real economy," said Chen Huaping, president of the Zhengzhou exchange.

Chen said the exchange will develop derivative products of the futures.