#Monsoon 2020 NCDEX and SKYMET joins hands to launch two Weather Derivative Products, the first in India

Record Breaking rainfall, Monsoons exceeding the expectations and Unpredictable Monsoons have been the course last few years. Recent trend is to have the South West Monsoon particularly during August –September and we saw unusually record breaking rainfall and unexpected floods reservoirs brimming to the capacity and mayhem associated with it. We hope #Monsoons2020 to be predictable and gentle.

With these erratic changes in weather conditions, we understand the importance of many derivative products to study and analyse the present conditions based on rainfall, moisture, temperature and wind, to help farmers and corporates prevent risks. These could help companies, traders and market analyse their business on the amount of rainfall.

With respect to that we understand that The National Commodity and Derivatives Exchange (NCDEX)  launches the first of its kind for India Weather Index and Rain index, a tool to track the monsoon’s progress, jointly with SKYMET, the private weather forecasting company to source data points and analyse them to put out a single composite value. The Weather Index could be the seasons guide and could also be a relative measure of the weather conditions all over the country while the Rain Index could be a Quantity that gives a measure of the amount of rainfall across the country and also seasonal variations from the last year. It is the product of the average rainfall and the average wind over a specified period. The Rain indices would start at zero and as base value on January 1 every year. Based on the actual rainfall data if there are no rains the indices could go upto negative also.

“NCDEX is supposed to launch these indices very soon and will be available to traders after approval from the regulator” said Kapil Dev Chief Business Officer.

The Weather indices would be useful for all classes of people in the country including farmers said Jatin Singh founder and Managing Director, Skymet Weather Solutions. The monsoons rains affect different strata of people and it makes sense they are available to all at a larger platform said Jatin Singh.

But what we understand is that the above said are all prognostic tools. Better the observation data and data –better the prognosis and diagnosis. The Rain gauges are located at 100 kms from each other and so the resolution of the said index is for spatial resolution of about 30,000 sq km and whether the index could beat the field realities is something that time will tell us. However the thought is good.