Dalian Commodity Exchange, which already trades agricultural futures such as corn and soybean, hopes to add contracts linked to the weather in a bid to offer hedge tools for farmers and insurance companies.

    The biggest futures exchange by trading volume among China's three said in a statement that it has been studying new contracts tied to temperatures or other climate indexes for years and had completed the initial design work.

    The statement, issued late on Wednesday, didn't say when the new contracts will be launched or whether they have been submitted to the China Securities Regulatory Commission for approval.

    Such contracts can be bought by farmers, as well as insurance firms, which suffer from adverse climate conditions like drought and storm. They are already, or soon to be, traded on exchanges in Chicago and Tokyo.

    "More than 70 percent of disaster-related losses in China are caused by the weather," Huang Shouhong, director at the farm department under the State Council's research arm, said in the statement.

    The exchange in Dalian, Liaoning Province, is also studying other contracts like live pig, chicken and rice.

    (Source: Shanghai Daily)