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Price Reliability Rather Than Trading Volume
Jun. 09, 2023The commodity futures market in Japan has declined in the last twenty years.
Although it has been keeping the form of the industry somehow, it becomes fatal if it decreases further. In order to measure the scale of the market, trading volume is certainly an important item, however, I think that an item to be more important than trading volume is price reliability.
For example, the distribution volume of the meat market at Shibaura, Tokyo is only about eight percent of the total meat distribution volume in Japan, however, the price announced there has been relied as a price indicator of meat market by the related persons.
Also, as to WTI crude oil listed on New York Mercantile Exchange (NYMEX), whose production volume is only about four hundred thousand barrels per day in inland area in Texas (0.5 percent of the production volume in the world), most of it has been transported within the United States through the pipelines via the oil refineries in Cushing, Oklahoma. That means any WTI crude oil hasn’t been export in Japan, however, if even such a local crude oil is recognized as “A price indicator”all over the world, it is to be considered as core product, and it can be said a good example that importance to take control of pricing is recognized.
To revive the commodity futures market in Japan, to begin with focusing on how much a price presented at a market has been relied and used by physical users, and then, we should think about future of a market reviewing product design. If one does that, one will see a clue to revive.
(Futures Tribune・issued May 30, 2023・no.3218)
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