Multi Commodity Exchange of India or MCX India has recently launched Malabar Garbled Black Pepper futures contract in order to expand its agricultural produce and make a significant contribution in the field of agriculture and its subsequent growth in the country.
As of now, the Black Pepper contracts will be available for the months of September, October and November for trading on the MCX. The trading unit will be 1 MT and the basis center is decided to be Kochi which is in the state of Kerala. Also, the Black Pepper futures contract will attract the transaction charges of Rs.5/- per crore of the turnover.
The last recorded volume as per the legal news by the MCX was 313 MT.
The black pepper futures contract comes with several benefits. Starting with the one of the most important and key responsibility of being a price risk management instrument, the black pepper futures contract will also help and support the agriculturists by enabling them to do a better cropping and thereby an improved produce, making wise sale verdicts, better enlightening on the flow of the information all across the crop ecosystem, managing better inventory management and warehousing, sorting infrastructure and bettering the access to finance.
The black pepper futures contract by MCX is armed with a strong storage and delivery system. It will serve as a practicable hedging podium to all the participants of the entire black pepper value chain like the traders, agriculturists, importers, exporters, wholesalers, and retailers who experience the risk of fluctuating prices depending on the national and global aspects.
Black pepper is a popular ingredient not only in the cooking but it also has a medicinal value and hence is used by the pharma companies too. It is also used as a preservative. The world’s largest producer and exporter of pepper is Vietnam which alone contributes to about 33% of the world’s pepper production. India mostly imports Pepper from Vietnam. The other countries from where the import of the pepper to India happens are Sri Lanka, Indonesia, and Brazil. Most of the pepper imported from these countries is re-exported as whole Black pepper. Out of the total exports, more than 70% of the black pepper is exported to the countries of US, UK and Canada and rest of the 30% is exported to the other European Union countries.
The MD and CEO of MCX, Mrugank Paranjape wishes to expand the presence of the Indian spice market by launching Black pepper contract. Previously they had already marked their presence in Indian spice market by launching the Cardamom futures contract.
This move was much needed looking at the risk of seasonal arrivals and price fluctuations in nifty future in the commodities like black pepper. The fluctuation in prices leads to the relatively lower prices in the harvest season. Due to the shifting economic atmosphere, ever fluctuating demand and supply of agricultural commodities, and an intense global competition, it created a demand for a competent and resourceful tool for risk management.
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