NMCE coffee volume soars

The online futures trading of coffee launched on February 22, 2005 on the National Multi Commodity Exchange (NMCE) has recorded a volume of Rs 93.95 crore within two weeks of its launch.

Of this the Robusta variety accounted for Rs 92 crore, while the rest was through Arabica.

The May contract for Robusta on March 7, clocked a volume of 3984 metric tonne (MT) worth Rs 23.91 crore and it touched an upper circuit of Rs 6111 per quintal before the market closing.

On the following two days the contract opened higher at Rs 6250 next day and closed at Rs. 6569.

On March 9 all the three series of Robusta May, July and September touched an upper circuit at Rs 7226, Rs 7431 and Rs 7576 a quintal respectively within 15 minutes of the opening session.

Kailash Gupta, managing director, NMCE, said, "To relieve roughly 70,000 coffee growers in India who had been suffering from a crisis for a long time, NMCE online coffee futures within only two weeks have provided a Rs 600 crore bailout to coffee growers via market forces. The government has been concerned about the industry by preparing a bailout package of similar amount as subsidy since 2001."

The NMCE coffee Robusta maintains a 95 per cent correlation with the international LIFFE Robusta prices.

The international market last week has visualised a solid uptrend overall due to a drought in Vietnam, the bulk supplier of Robusta to the world.

This has threatened Robusta supply next year and consequently active buyers in London are looking for a correction soon.

The commercial sellers who are inactive now out of the drought fears, are focusing on the forthcoming Brazil production.

International Coffee Organization's (ICO) composite indicator prices of coffee shows that international market has started recovering from the sluggish price trend which has continued since October 2000.

With the national launch of coffee futures trading, Indian trade has received a nation wide platform with technical upgradation to compete internationally in the world's second most traded commodity.

Since most of the coffee growers are small or medium size, price risk management is increasingly becoming important.

In NMCE coffee futures all contracts are standardised to ensure stability and allow for price discovery.