The Ministry of Agriculture, Forestry and Fisheries (MAFF) gave a lecture on “The significance and expectations of rice futures trading ” to rice farmers and dealers at the information exchange meeting on“Rice futures trading”hosted by the agricultural think tank, Agricultural Policy Research Committee on October 1. It was the first time that the competent ministry, MAFF has publicly backed up the new indexed rice futures transaction. At the meeting, the director of commodity trade group, new business and food industry department, minister’s secretariat, MAFF, the division with jurisdiction, Ikuo Miyanaga took the stage. He mentioned the background of “The study meeting on future rice price by practitioners ” organized and held by the initiative of MAFF from August 2023 to January 2024 and introduced an example of the use of rice futures trading, etc. After that, the president of Dojima Exchange (ODEX), Wataru Ariga explained future promotion measures, etc. of the exchange.

Mr. Miyanaga’s lecture lasted about an hour. He showed the significance that future price will be revealed by the existence of rice futures market to rice farmers and rice dealers and introduced rice futures trading giving an example of combining and utilizing multiple rice trading. Specifically, he explained the practical usage such as combination of advance contracts and futures trading, and combination of spot market and futures market.

In fact, as for the listing of rice average price futures transaction on ODEX, MAFF seems to have been moving around a lot behind the scenes for its approval. Among “The study meeting on future rice price by practitioners ”, “future price”means actually futures price, however, the reason why MAFF used it as future price instead of using it as futures price is said that there was consideration not to irritate the people involved such as agricultural group. It means that MAFF has been keeping with ODEX since the summer of 2023 for permanent listing of rice futures. Such a relationship was also seen while ODEX was aiming to move from the trial listing to the application of permanent listing, last time. As for the previous rice futures transaction on ODEX, the application of permanent listing was disapproved in August 2021.However, during the period leading up to the application of the permanent listing, ODEX and MAFF had repeated very detailed discussions, and the application date for the permanent listing was also determined based on advice from MAFF.

In June 2021, when ODEX held some seminars in major rice producing areas in Miyagi, Akita and Niigata prefectures, the director of commodity trade office, the official in charge of MAFF, Daisuke Watanabe accompanied ODEX and explained under the title of “The agricultural futures trading system and the situation surrounding rice futures trading” at those seminar venues . Just before the deadline for the trial listing in July 2021, at the stage when the application for the permanent listing is certain to be made, a series of actions by MAFF on the side that examines it seemed to have supported the application for permanent listing and the situation was extremely exceptional. In fact, the director of the division, Watanabe prefaced each mention with “We have not yet made a statement regarding whether or not the permanent listing will be approved ” at the beginning of his speech.

Against the background, it seems to be affected by the crisis situation in agricultural futures market. Looking at the volume in this September, agricultural futures product which had trading volume was only corn listed on Osaka Exchange, a subsidiary of Japan Exchange Group (JPX) other than rice average listed on ODEX, and trading volume in this September of the corn was 68, so it is almost dormant. Also, regarding red bean, which used to be represented commodity futures trading, and soybean, zero trading volume has become the norm. Therefore, agricultural futures market is almost destroyed, so the role of MAFF as jurisdiction over commodity futures industry is likely to be transferred to the Ministry of Finance, and the Ministry of Economy, Trade and Industry (METI). MAFF should want to avoid the situation. The reason why MAFF supported the rice futures trading was that the interests and disadvantages were the same as those of ODEX that had been aiming for the permanent listing.

However, blame for the downfall of agricultural futures market also lies in the passive attitude of JPX. Originally, there was a plan to establish an integrated exchange and the plan also included the promotion of agricultural futures trading. Nevertheless, when the products listed on TOCOM are to be transferred to Osaka Exchange, JPX’s true feeling that it wants only gold and crude oil has been heard, so agricultural products have been treated as nuisances since they were transferred to Osaka Exchange. Despite having such thought, JPX couldn’t completely cut out agricultural products from the concept of an integrated exchange, and as a result, currently, it appears that improvements of agricultural futures trading with a focus on corn are being considered.

Securing liquidity is the key to futures trading－the president of ODEX explained

Furthermore, the president of ODEX, Ariga explained usage of Dojima Rice Average, etc.
The outline of his lecture is as follows:

The target products of the previous rice futures trading were several brands of rice such as Niigata Koshihikari, Akita-komachi. There were settlement with physical rice and deliveries in the system. But, this time, there is no such a system. The biggest reason why the rice futures has been indexed, this time, is to aggregate trading volume. Although there was a fair amount of trading volume in the previous rice futures trading, as it was divided into several brands of rice, the number of participants in each transaction was limited. Therefore, we aggregated them into one index because we wanted a diverse range of participants to trade in one transaction, this time.

Some people say that the index futures trading is difficult to understand, however, securing of trading volume and liquidity are the keys to futures trading, and a market cannot be established without trading how good the product is.

Dojima Rice Average futures transaction was listed on ODEX on August 13. At the beginning, the trading for February, April and June 2025 expiration started with an initial price of 17,200 yen (1 bale). After that, the trading reached a daily high limit every day. Around the time, rice was the off-season period, so the spot price also skyrocketed and such news was reported every day. Along with that, the futures price once rose to 24,000 yen. However, it started to decline from September 4 and fell to the low 18,000 yen range. Then, it rose again from September 25, and today (October 1) it is just over 20,000 yen.

“Dojima Rice Average”is a futures transaction based on average price of more than 100 brands of rice from all over the country. As for its benchmark price, for example, the benchmark price of the transaction for February expiration is average value (estimated value) of prices in one-on-one rice trading in February calculated based on prices (in January) in one-on-one rice trading, etc. announced by MAFF

（Futures Tribune・issued October 1, 2024 ・no.3315）