NCDEX to offer more metal, agriculture futures soon

NEW DELHI: National Commodity & Derivatives Exchange ( NCDEX) is planning to launch a slew of agri and metal products in the coming days. In the metal segment, a new gold and steel hot rolled futures is on the anvil.

The exchange is also planning to launch crude palm oil, bajra and cottonseed future. "We are exploring a slightly different product in the gold sector. The current RBI restrictions on import and the 80:20 rule where any importer necessarily has to sell part of its imports to an exporter are creating complications in delivering gold on exchange platform," said Samir Shah, MD at NCDEX.

According to Shah, its current gold contract would not be phased out as he expected the export restriction on gold not to continue for a long time. "We are studying and seeing whether there is a need to change the contract specification in order to meet the needs of hedgers, jewellers and importers of gold in a much more effective way. We have written to Forward Markets Commission (FMC) to consider a change and we are in discussion with them," said Shah.

The exchange currently has a 99% agri portfolio and is now targeting to end up in a situation where 20-30% of its trading comes out of non-agri products over the next two to three years. On Thursday, NCDEX launched a modified steel long contract based on BIS 2830 grade with four monthly contracts expiring from December. Next in line would be hot-rolled steel coil futures, said Shah. "We are looking at multiple products in the steel segment and doing a feasibility study," he said. After energy, steel was the second-most traded physical commodity.

"A mature contract as per global benchmarks is when open interest reaches 20% of the production of that contract. We have two such contracts, which are reaching maturity. One castor seed and another is soya oil. If I assume that long steel reaches 1% open interest of its production, then we could be trading Rs 1,000 crore per day. This will be 20% of our current volumes," said Shah.

In the agriculture futures portfolio, the exchange is going to re-launch crude palm oil futures in the next 7-10 days, thereby completing its edible oil complex. "We have received FMC approval and will re-launch the crude palm oil contract in a week to 10 days time," said Shah adding that bajra and cotton seed futures were also in the pipeline. NCDEX is also looking at corporates to invest in the warehousing segment, raising the bar on the infrastructure .

"We want large corporates to participate in warehousing as demand in agri and non-agri is huge. We would like Mahindra Logistics to participate with us and will start discussions with them. ITC has expressed interest to register with us. They have good quality warehouses where they store their own soybean in Madhya Pradesh," said Shah.