Yunnan Province Sugar Sugar Mills Hedging The Problem Research

In recent years, with the global sugar industry step into a cycle of increasing production where supply exceeds demand, the price of global sugar market has fallen. In2012and2013, the New York raw sugar prices, peaking at22cents per pound at the very beginning, fell below16cents per pound. In2013and2014, Chinese domestic prices dropped from7000Yuan to4000Yuan.Yunnan, as the second sugar producing area of China, faces the increasing risks and more risk exposure, therefore the local sugar press enterprises should make use of the sugar futures market hedging function to better allocate funds and resources and to avoid the market price risk. In the era of economic globalization, the financial market is more and more developed and a variety of new financial tools are introduced. As one of the most important financial instruments, futures, plays a more and more significant role in promoting economic development. Due to the growing complexity of the market, sugar press enterprises in Yunnan need to participate in hedging to minimize the price risks, which will help local enterprises to survive and develop better.Because of the short history of sugar futures in China, the author, basing on his own experience, analyzes problems in futures hedge in sugar press enterprises, summarizes scientific and efficient hedge strategies with the hope to help Yunnan sugar press enterprises increase the chances of success in futures hedge and avoid price fluctuating risks, which will hopefully contribute to Yunnan sugar press enterprises’ operation and development.