NCDEX launches Basmati futures

Chennai: More than a decade after rice futures were withdrawn from the trading platform, the National Commodity and Derivatives Exchange is launching Basmati paddy futures.

Indian Basmati Paddy –Pusa 1121 is being launched by the NCDEX to facilitate an effective risk management tool to the market participants and also provide a fair price discovery platform, the exchange said. Karnal, a core trading centre of Haryana, will remain as basis delivery centre, while Sonipat will be the additional delivery centre. The lot size is 10 metric tonne with compulsory delivery option.

Rice futures on the NCDEX were banned in 2007 when the inflation levels were high. According to industry watchers, inflation is now at comfortable levels and the country has surplus production of grains and pulses. Further, the futures market in India too has matured in a decade.  

“Indian grain industry, which has been growing at a steady rate year on year, is exposed to high price risk. Food grain industry uses wheat, maize and paddy as inputs for measuring demand and supply trend of grains and any adverse price movement can erode whole profit margin. The NCDEX already has wheat and maize futures on its platform. Addition of Paddy (Basmati) – Pusa 1121 will improve decision making of the value chain,” Kapil Dev, EVP Business, NCDEX, said.

The total global production of basmati is 8 to 9 million tonne and India produces more than 70 per cent or about 5.5 million tonne. Pakistan accounts for the remaining 30 per cent share.

Basmati contributes around 5 per cent to India’s rice production.