Ncdex to relaunch yellow pea contract

The National Commodity & Derivatives Exchange (Ncdex), the world's third-largest agri commodity exchange, has obtained the Forward Markets Commission's (FMC) go-ahead for relaunching a broadbased yellow pea futures contract.

The contracts, to be relaunched after a one-month gap, will be made available for trade on December 11 for January, February and March.

The new contract would be different in many ways, said sources.

"This is the re-birth of yellow pea contracts on the Ncdex, which were stopped because of quality issues. Only the yellow pea of Canadian origin (No. 2 category there) was permitted for delivery in the earlier contract. But in the new contact, domestic as well as Canadian-origin yellow pea will be delivered from our three delivery centres "� Mumbai, Kanpur and Kolkata "� without any locational premium and discounts," said Abhishekh Nanda, product head at Ncdex.

While for the previous contract, Mumbai was the only delivery centre, for the new contract, Kanpur has been fixed as the main delivery centre, in addition to Mumbai and Kolkata.

Nanda said Kanpur was a natural choice as the delivery centre as the region produced about 6-7 lakh tonne yellow peas a year, while the country's total consumption is 11-12 tonne.

"We have made quality specifications in such a way that irrespective of its origin the commodity will be deliverable with an eye on delivering up to 80 per cent of the total consumption," he added.

While the contract size has been set at 10 tonne, the price may be quoted in the rupees-per-quintal term. Tick size (minimum price movement) will remain at Re 1.

These contracts are expected to remain under FMC's new provision for open position limit at 400 tonne on the client-side level and 1,200 tonne on the member-side level for near month contracts, while the same will be 10 times higher for the far month contracts.

The contracts will enjoy a cooling period of 15 minutes once the price touches the circuit of 4 per cent in either direction.

Price variation to the tune of an additional 2 per cent in the same direction will force the contract to halt for the day.

The Ncdex had applied for the new approval with renewed quality specifications.

But with limited options available for fair price discovery in the existing contract specifications, the regulator had no option other than permitting delivery of the local variety instead of imported one and vice versa.

This is not the first time that the FMC has permitted such inter-variety cross delivery for one contract. It has allowed delivery of the local variety for Burmese urad and vice and versa.