In just four hours this week, Chinese speculators traded as many apples as the country consumes in three months. That’s about 60 billion of the Fuji variety, enough to keep the doctor away for a very, very long time.
In an extraordinary bout of trading on Tuesday, investors on the Zhengzhou Commodity Exchange bought and sold about 964,000 futures contracts. At 10 metric tons apiece and a price of about 7,200 yuan ($1,138) a ton, that’s almost $11 billion worth of apples.
Even in the febrile world of China’s commodity markets, where everything from steel to eggs change hands with an intensity that makes the world’s more established exchanges look docile, the explosion in apple volumes stands out. Each contract was held on average an estimated 16 minutes, compared with about 50 hours for the average crude-oil contract on the New York Mercantile Exchange.
The world’s first apple futures started trading last December as a means for farmers to hedge output of the most popular fruit in the world’s biggest grower. After initial enthusiasm, volumes trailed off before picking up again in February, after the end of the Lunar New Year.
Nobody answered calls to the press office of the Zhengzhou Commodity Exchange, and a spokesman for the bourse didn’t respond to a Wechat message. Almost 545,000 apple contracts traded on Wednesday.
“The contract is attracting lots of funds that are playing on uncertainties around the physical delivery of the apples,” said Gao Bin, an analyst at Shanghai SHZQ Futures Co. “Spot prices fluctuate wildly because fresh fruit are perishable and hard to preserve. We are also talking about the world’s biggest producing nation, which doesn’t have sufficient data about output.” Trading in commodities across the nation’s three main exchanges has exploded in recent years, with regulators repeatedly stepping in to quell fears of a bubble during particularly wild bouts of activity. Shortly after the launch of the apples contract, the China Securities Regulatory Commission said it would strengthen supervision of the futures and firmly fight against market manipulation.