SHANGHAI, March 26: China’s Zhengzhou Commodity Exchange is likely to relaunch the trade of cotton futures in June or July, as the country faces increased competition from its WTO commitments, state press reported on Wednesday.

The exchange plans to submit an application next month to the China Securities Regulatory Commission to trade cotton futures, said the Economic Information Daily, citing Tang Qingron, deputy general manager of the exchange.

Located in China’s central Henan province, the exchange hopes to begin trading cotton futures in the second quarter, white sugar futures in the third quarter, and rape seed futures at an unspecified date, Tang said.

Exchange regulators received approval last November from China’s State Council to make preparations to reopen the exchange, which was closed in 1995 due to poor risk controls and overly speculative trading.

As the world’s largest cotton producer, China hopes the hedging of risks on the exchange will protect processors and textile companies, which are expected to face fierce competition as the country implements its World Trade Organization (WTO) commitments.

China will increase its annual import quota, as stipulated by its WTO agreements, to 894,000 tons by 2004, which account for about 20 percent of the current annual consumption by local textile companies.

The mainland has futures exchanges in Shanghai, Dalian and Zhengzhou that trade contracts in copper, aluminum, rubber, wheat and soybeans.

It scrapped financial futures trading in 1995 after a major scandal, but discussions to resume trade are ongoing. —AFP