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Informist, Monday, Jun. 30, 2025

 

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--NCDEX official: Inked MoU with IMD for rainfall indices for weather futures
--NCDEX official: Yet to receive SEBI nod for weather futures launch
--NCDEX official: Rainfall indices to track monsoon, monthly rain across India
--NCDEX official: Tenure of MoU with Skymet for rainfall indices ended
--NCDEX official: See power, insurance sectors as users of weather futures

 

By Afra Abubacker and Pallavi Singhal

 

NEW DELHI – The National Commodity and Derivatives Exchange has signed a memorandum of understanding with the India Meteorological Department under which the weather agency will provide data feed on rains and progress of monsoon for the Indian Rain Index and Indian Monsoon Index, a senior NCDEX official told Informist. Earlier, Skymet provided the data for the indices. However, the indices have not been updated after the tenure of the exchange's contract with the private weather forecaster ended.

 

"We decided to work with IMD because its forecasts have greater market acceptance and better historical data," the official said. IMD will provide forecasts and historical rainfall data to help NCDEX update its indices.

 

The Indian Monsoon Index, which was last updated on May 10, tracks rainfall from June to September and the Indian Rain Index, which was last updated on Sept. 30, monitors monthly rainfall trends across the country. The southwest monsoon is India's most critical weather event, delivering about 70% of the country's annual rainfall and replenishing reservoirs, which ensures food and energy security.

 

While NCDEX has received the Securities and Exchange Board of India's approval to include rainfall indices in its product basket, it is still awaiting final approval to launch weather futures, the official said.

 

The weather futures contracts will be anchored on indices that track rainfall across India. The contract is at an advanced stage of development, with most of the specifications already finalised. "The product is ready. We will share the detailed contract specifications closer to the launch," the official said.

 

The exchange aims to time the launch of weather futures carefully as the market plans operations well before monsoon arrival. However, having missed the window this year with monsoon already covering most of India, NCDEX is likely to launch the futures next year. NCDEX also wants to ensure that the market is better prepared to absorb such a product. "The collaboration with IMD is part of a broader market-building exercise," the official said.

 

The exchange sees power, insurance, and agriculture sectors as the main users of rainfall futures. Rainfall significantly impacts the operations of power plants and coal logistics, while insurers rely on weather data to assess crop damage and price climate-related risks. End

 

Edited by Akul Nishant Akhoury

 

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