Friday 02 December 2022

India’s NCDEX is gearing up today the Robusta Cherry AB Coffee Futures contract

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MUMBAI, India – India’s National Commodity and Derivatives Exchange (NCDEX) is relaunching today (September 30th) the Robusta Cherry AB Coffee Futures contract, the exchange said on Thursday. Initially, there will be three contracts available for trading expiring in the months of next February, March and April.

The contract will be a compulsory delivery contract and deliverable at Kushalnagar in Karnataka.

Arun Raste, managing director and chief executive officer of NCDEX, stated the contract being launched would enable Indian growers to hedge their price risks, individually and collectively. With this contract, NCDEX hopes to bring down the complexity of trade and make it easier, Raste said.

Moreover, as the commodity has a strong global footprint, this would be a significant step in achieving self-sufficiency as far as providing coffee value chain participants with an indigenous source of benchmark pricing is concerned.

In India, coffee is produced in southern states (mainly Karnataka) by small growers, who are vulnerable to price volatility in the domestic market due to its linkage to global prices.

Kapil Dev, chief business officer at NCDEX, said globally, coffee has been one of the top traded soft-commodity contracts. But in the absence of any hedging tool domestically, the Indian growers had few options available to take benefit of such activities.

As India exports over 60% of the produce, the indigenous coffee futures contract will prove to be a boon for exporters in exercising price risk management domestically.

NCDEX stopped futures trading in Robusta coffee in January 2007 following lukewarm response from participants.

According to the ICO, India’s coffee production reached 5.7 million bags of coffee in crop year 2020/21, up 14.3% from the previous year.

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