China is the world's top hog producer and pork consumer, with more than half the world’s total in both categories. (Photo: Agencies)

The China Securities Regulatory Commission officially approved the launch of hog futures on Friday by the Dalian Commodity Exchange, making it the first live delivery derivative to be listed in China's futures market.

China is the world's top hog producer and pork consumer, with more than half the world's total in both categories. It sold more than 540 million hogs and produced more than 42 million tons of pork in 2019.

The Dalian Exchange said the listing of hog futures is an important measure for China's futures market as it serves the development of the real economy.

China's pork industry has experienced "hog cycles" for many years. The drastic fluctuation of the spot price of hogs adds considerable uncertainty to the enterprises and the healthy development of the industry.

"With the increasing standardization of hog breeds, the conditions gradually became ripe for listing hog futures," the Dalian Exchange said in a statement.

Market analysts said the full play of hog futures will improve the pricing mechanism, enhance risk management for market participants and boost the development of the entire industry.

Sources from the Dalian Commodity Exchange said it has completed the overall design of hog futures contracts and rules to ensure warehouse procedures are carried out in an orderly manner. Business and technical systems are ready, they said.