ICEX to launch new set of agri contracts next month

The Indian Commodity Exchange (ICEX), the latest entrant in commodity derivatives trading, plans to launch a new set of agri contracts in a month. These will include rapeseed and mustard seed, soybean and turmeric.

The exchange, promoted by Indiabulls Financial Services and MMTC, is meanwhile consolidating its focus on existing commodities, mainly the recently launched two illiquid contracts, on natural gas and lead. These have failed to attract traders’ attention on ICEX.

“We have already obtained regulatory approval for rapeseed/mustard seed, soybean and turmeric from the Forward Markets Commission (FMC) and are currently sorting out logistics issues,” said Ajit Mittal, CEO of the exchange. “Once resolved, we would expand offerings in agri commodities. In the meantime, we are consolidating our activities in existing contracts,” he added.

Turmeric and mustard seed are currently passing through their harvesting season. During this time, availability from local sources increases, leading to a fall in trading sentiment on futures platform.

Today, farmers sell their output directly to arhatiyas, who in turn store commodities for selling after a couple of months, when farmers’ scattered selling will exhaust and the overall crop size will be known. Having commenced operation on November 27, ICEX currently generates one-sided average daily turnover of Rs 1,500 crore. It also seeks to attract farmers for price discovery.

Small farmers are presently barred from direct involvement in online futures trading. However, they have benefited indirectly from price displays on ticker boards in major mandis.

The exchange was able to rope in a number of traders and participants from the physical market in the first three months of operations. Apart from gold and silver, the exchange launched contracts in base metals and energy products, such as copper, lead, crude oil and natural gas. From the agri basket, contracts in guar seed and refined soya oil were introduced.

The country’s second largest commodity exchange, the National Commodity & Derivatives Exchange, introduced lead contracts on Friday, which until Monday remained untraded on the exchange platform. It also expanded a new set of internationally referenceable commodities for fresh positions till the date of expiry of contracts.

A circular on its website says the regulator has allowed fresh positions till the date of expiry in contracts of platinum, heating oil, gasoline, lead and silver (five kg), which was earlier confined to natural gas, gold international, silver international and CER, in addition to zinc, copper, aluminum, nickel and crude oil.