Indian Commodity Exchange Limited (ICEX) has launched and revamped the black pepper futures contract on 20 May 2019. The change in the contract has been brought upon following extensive consultations with market participants.
The new contract would have a 550gm/liter weight which conforms to the quality standard produced and consumed in the prevailing market. Black Pepper futures contracts are being re-launched on the ICEX and has been tweaked with a few quality changes, which now represent the existing physical market. This was done after very wide consultation with the physical market participants.
Presently, this contract is not available for trading on any other exchange in India. The availability of futures trading in black pepper shall satiate the need of the stakeholders. To begin with, three contracts expiring in July , August and September will be available for trading concurrently. The trading lot size and delivery unit of the contract has been designated at 1 MT with compulsory delivery at Kadavanthra, Ernakulum, the desired delivery location.
Commenting about the re-launch, Sanjit Prasad, MD & CEO, ICEX, said, “Historically black pepper contract is one of the oldest contracts to have been launched in the commodity derivative market. Unfortunately, it has witnessed a chequred history. ICEX after doing an in-depth study of the physical market has consciously decided to re-launch contract based on liter weight- 550 GL rather than location specific characteristics-MG1.”
He added that the physical market size of black pepper is about Rs 3000 crores per year. The commodity exhibits extreme price volatility impacting the producer, exporter and importer. Hence, Prasad feels the launch of ICEX Black Pepper Derivatives would be of great economic relevance to the black pepper physical market ecosystem.
