Trading has soared in apple futures since they were launched in December 2017 on the Zhengzhou Commodity Exchange in December. In a single day alone (15th May), 4.6 million contracts were exchanged, representing 46 million tons of apples, or, to put it another way, China’s entire annual production or about half the world’s annual crop. This activity seems absurd yet strongly reminiscent of what happened to trading in imported iron ore in March 2016, when prices rocketed 26% in a day. Something similar happened with cotton a month later when enough was traded in Zhengzhou to clothe every person on the planet.
Since that price rally in iron ore, stocks have been trading at the same level or higher about 80% of the time. Likewise, since the price of cotton soared, the average value of stocks has been almost 17% higher. Therefore, the rocketing of apple futures may not represent a bubble. However, it has been observed that China’s apple market is currently experiencing a surplus following years of overinvestment, and there are insufficient volumes of quality apples to back up the high prices.