Informist, Thursday, Sep 19, 2024

By J. Navya Sruthi and Pallavi Singhal

MUMBAI – The National Commodity and Derivatives Exchange is likely to venture into weather futures and non-agri commodity futures to diversify its product base, said Arun Raste, managing director and chief executive officer.

"Look at a country like the US, they have snowfall index snowfall futures, now snowfall futures don't work in India," Raste told Informist on the sidelines of Tefla's Wheat Summit on Tuesday. A country like India requires rainfall futures and temperature futures, he said.

In June 2020, the exchange had introduced two rainfall-based indices--Indian rain index and Indian monsoon index. The Indian Monsoon Index tracks the southwest monsoon for Jun-Sep every year, while the Indian Rain Index tracks the monthly performance of the rainfall across the country.

India's agriculture sector depends heavily on the southwest monsoon, its progress and staggered withdrawal, for both kharif and rabi crops. Any uncertainty hurts not just the agriculture sector but other sectors as well.

On carbon futures, Raste said the exchange has submitted a proposal to the Securities and Exchange Board of India. "Unfortunately, as things stand today, this country has three different ministries and three different ministries have three different standards for carbon trading.... Now we understand that NITI Aayog is trying to, you know, look at a common narrative between these (all three ministries) and once that happens, possibly our carbon futures contract might come, or we might have to rework on that," he said.

AGRI COMMODITIES TRADE BAN

In October, SEBI had extended the suspension of futures trading in derivative contracts of paddy-non-basmati, wheat, chana, mustard seed and its derivatives, soybean and its derivatives, crude palm oil, and moong till Dec 20, 2024.

Raste said the ban on trading these commodities should be lifted as there is no reference price point for farmers. "Today, if you look at the state of Madhya Pradesh, which is the largest soybean growing state, the prices are below MSP (minimum support price), (while) last year, the soybean prices were up, everybody went and sold soybean, this year the prices are down, they (farmers) don't have a reference point, they have to sell locally," he said.

"Now, a peculiar situation has happened, that in the state of Maharashtra...(the) government has decided that they will buy at MSP. Now what will happen is they have not done it in MP (Madhya Pradesh). Now the Madhya Pradesh farmers will come to Maharashtra and sell it here. Some of these peculiar things can be avoided if you have a national reference point, if you have a national market and if you have a futures point," Raste said.

Raste said the exchange has been in talks with SEBI to lift the ban on futures trading of several agri-commodities. End

Edited by Akul Nishant Akhoury

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