Frequent fluctuations in cotton yarn prices have had negative impacts on related industries in the past few years. China’s securities regulator has approved the launch of cotton yarn futures on the Zhengzhou Commodity Exchange. The cotton yarn futures, together with the cotton futures that are already traded, will help companies to improve risk management.
Futures contracts obligate investors to buy or sell the underlying assets at a predetermined price at a specified time, helping investors mitigate risks of price volatilities, according to a Chinese news agency.
China has been developing its commodity derivatives market and plans to gradually open it up to foreign investors. Earlier in April, the country launched white sugar options, the second commodity options after soybean meal.