The Union Minister for Finance and Corporate Affairs, Arun Jaitley launching the India’s 1st Agri – Commodity Options Contracts in Guar Seed, in New Delhi on January 14, 2018.
The Union Minister for Finance and Corporate Affairs, Arun Jaitley launching the India’s 1st Agri – Commodity Options Contracts in Guar Seed, in New Delhi on January 14, 2018.

India introduces Agri-Options to the commodity market; FM launches Options Contracts in Guar Seed

The Union Finance Minister, Arun Jaitley said that India ranks among the fastest growing major economies in the world today. He said that since a large portion of our population is dependent on agriculture, it is important to have equitable growth. Jaitley said that farmers have helped the country to overcome a long period of scarcities to reach the present era of abundance.

The Union Finance Minister, Arun Jaitley was delivering the Inaugural Address after launching the country’s first agri-commodity options in Guar Seed in New Delhi on 15 January 2018. He said that NCDEX Agri-options are an important tool which will contribute to the Prime Minister’s vision of doubling the farmers’ incomes by 2022. The Finance Minister said that the Guar seed is a major contributor to revenue generation, hence making it a suitable commodity to start with for Options. The Finance Minster congratulated the NCDEX for this initiative.

Speaking further on the occasion, the Finance Minister, Jaitley said that this may appear to be a small step, but is a significant one, in the direction of agricultural trade as this will ensure that the farmers will receive a better price for their commodities. Total Volume Traded 8010 MT; Total Open Interest 4290 MT; Approx. Traded Value INR 36 Crore on the basis of Notional Turnover.

NCDEX Agri-Options in Guar Seed a boon for price discovery for farmers

NCDEX also launched Mandi.com, a mobile app for farmers where they can learn more about Options and the commodity markets. For a commodity trader or member of a Farmer Producer Organisation (FPO), this would be an additional tool to hedge price risk and optimise profits with the launch of Agri-Options .

National Commodity and Derivatives Exchange Limited (NCDEX) launched India’s first Agri-Options on guar seed futures in the presence of SEBI, WDRA, Industry Associations, Government Officials and FPO members. Farmers from various States across the country were present at the occasion to mark the commencement with a Live Trade by a farmer producer company.

Launched on the auspicious occasion of Makar Sankranti, this new hedging tool, Agri-Options:Ek Aur Kadam Kisan Pragati Ki Aur, is set to mark an important evolution in trading of agriculture commodities market. This instrument will give a strong impetus towards systematic development and transformation of commodity derivatives market in India, which will make the agri-economy more efficient and bring huge amount of value for the farmers of India.A Mandi.commobile application was also launched on the occasion, where farmers can learn more about agri-Options and the commodities market. Mandi.com is a pro bono half-an-hour ‘weekly show’ produced by NCDEX for National Public Service Broadcaster, DD Kisan Channel, a program dedicated to farmers’ education and awareness.

Among stakeholders FM Arun Jaitley at the launch of the India’s 1st Agri – Commodity Options Contracts in Guar Seed

Among stakeholders FM Arun Jaitley at the launch of the India’s 1st Agri – Commodity Options Contracts in Guar Seed

Elaborating on the benefits of Options, Rabi Narayan Das, Chairman, NCDEX, said, “The long wait for agri-commodity Options has finally come to an end with the launch of agri-Options on NCDEX’s platform.Agri-Options will serve as a powerful tool to empower farmers by allowing them to lock in the prices of their produce at a minimum cost. It has the potential to transform Indian commodity market in a way that will benefit more farmers across the country for their hedging requirements. While, as of now, agri-Options is allowed in only one agri-commodity, we can expect more commodities under this over a period of time.”

Gracing the occasion with a recorded video message, the Union Minister of Commerce & Industry Suresh Prabhu welcomed the Agri-Options to the commodity market, He said that he congratulates NCDEX for taking this noble step, which will contribute towards empowering the farming community and will further strengthen the agricultural ecosystem.

Announcing the launch, Samir Shah, MD & CEO, NCDEX said, “We are thankful to SEBI for giving us the ‘go-ahead’ for introducing Options on guar seed futures, which will help the farmers in better price realisation and risk mitigation. Our journey to connect farmers to the market would not have been possible without the immense support of our stakeholders and value chain partners and I take this opportunity to extend my heartfelt thanks to all those who have contributed to make this happen. This instrument will create a win-win situation for farmers irrespective of the price movement. We hope with this step we bring more and more PRAGATI for everyone.”

In order to offer the audience a thought-provoking discussion on Agri-commodity markets, a panel discussion was also conducted by NCDEX. The panel was presided by experts Ramesh Chand, Member, Niti Aayog, Shashank Saksena, Economic Advisor, Department of Economic Affairs (DEA), Ministry of Finance, D.K. Aggarwal, Chairman and MD, SMC Comtrade, and Samir Shah, MD & CEO, NCDEX. The panel discussed the role Agri-Options can play as a new age hedging tool in the hands of the farmers and will be a game changer in the Agri-Commodity markets. The speakers said working models in other countries need to be studied so that retail prices for consumers can come down.

Key information: Guar Seed Options

Options contracts expiring in the months of February 2018, March 2018 and April 2018 would be available for trading w.e.f. January 14, 2018. The Guar Seed Options will be European type with a tick size of Re. 0.50 per quintal. The Daily Price Range (DPR) will be based on the factors of DPR of the underlying Futures contract and volatility. Options contract shall be launched on the trading day following the day on which the underlying Futures contract is launched. The expiry date of agri-Options will be the last Wednesday of the month that precedes the month of expiry of the underlying Futures contract. If Wednesday happens to be a holiday, then the Expiry Date shall be the next trading day of the Exchange. In case of banking transaction closing days etc. close to the Options Expiry Date, the same shall be fixed to provide for sufficient time ahead of such days. However, launch calendar with exact date of expirations shall be notified in advance.

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