Latest News: NSE to Launch First Agricultural Commodity Futures

The NSE (National Stock Exchange) it will be launching its first agricultural commodity futures contract and the announcement regarding this was made on Monday. The contract to be launched will be for crude degummed soybean oil, with effect from December 1. As conveyed to the Business Standard, Mr. Vikram Limaye, MD and CEO of NSE said "India being one of the largest consumers of edible oils in the world requires an efficient hedging mechanism for crude soybean oil as well. This product will work as a perfect price risk management tool for the market participants and the commodity ecosystem at large". 

According to the NSE officials, the contract will facilitate the soybean oils processing and allied industries in India and overseas, thereby offering a perfect hedging tool for managing their price. The contract will be actually a monthly expiry cash settled futures contract with a trading lot size of 10 metric ton (MT) and price basis as Kandla i.e. benchmark market will be Kandla for seeking price cues for the product. 

As per Executive Director of The Solvent Extractors' Association of India (SEA) Mr. B V Mehta, the exchange traded derivatives contracts are a very useful tool that make price risk management convenient and easy for the industry. With this announcement the industry expects Indian commodity markets to develop further on the back of availability of a convenient and cost-effective on shore hedging product. Currently NCDEX has the leading participation in the edible oil derivatives and till now the price discovery mechanism in edible oils and oilseeds segment has been the best, when compared with the other Agricultural commodities, traded at the NCDEX.