Forwards contracts in Pulses brings national market to farmers

Mumbai, February 9, 2015: NCDEX, the leading commodity exchange in India has launched forwards contracts in seven additional commodities including Urad, Tur, Yellow peas, Yellow soya bean meal(Domestic), Pepper, RBD Palmolein and Bajra. The forwards contracts in these seven commodities will be on a fixed price basis; where the buyer and seller will have the flexibility to trade any quantity and quality of commodity at a mutually agreeable price. 

With the introduction of exchange traded forwards in the major pulses produced in the country; the prevailing challenges of transparent price discovery and risk management can be effectively addressed. Indian Pulses & Grains Association (IPGA), the apex body of India’s pulses and grains industry & trade and NCDEX will work closely to educate the trader community about the benefits of risk management and exchange traded forwards.

NCDEX is the only Exchange in the country to offer exchange traded forwards contracts, which have expanded the market by providing a national market access to farmers and traders, reduced overhead costs for its participants and has instilled confidence with regard to minimizing counter-party default risks. In the short span of time since its launch in end September 2014, 136 trades have been successfully completed with close to 6200 tonne of commodity being traded across Delhi, Mumbai, Hyderabad, Jaipur, Kolkata among others. Additionally, 14 FPOs from Maharashtra and Madhya Pradesh have taken advantage of the special discounted membership of the forwards segment. Presently exchange traded forwards are being offered in 19 commodities. 

Speaking at the launch, Samir Shah, MD & CEO, NCDEX said, “With India being the biggest producer, consumer and importer of pulses in the world, the trading fraternity faces price risks which can threaten the profitability of their enterprise. Pulses forwardscan provide them with not only a robust risk management tool but also transparent price discovery and national market access.”

PravinDongre, Chairman, IPGA said “Most importers enter into forward commitments with overseas exporters and the availability of exchange traded forwards will go a long way in building confidence among the participants. We will extend our utmost support to educate the industry about this tool”.