The agricultural commodity exchange on Monday re-launched futures contract in coffee (Robusta Cherry AB variety). The re-launch offers newer opportunities to stakeholders including coffee growers, processors, exporters, traders and investors for effective price risk management.

The coffee futures contract, launched earlier in 2005 did not succeed due to issues of coffee volumes, pricing, infrastructure facilities etc, said MD & CEO, NCDEX, P H Ravikumar. The re-launch is a more systematic initiative.

Creating awareness
NCDEX is working with farmers to create awareness about the process and benefits. It has re-worked the unit of trading as well as the delivery unit of the coffee contract to two metric tonnes. The Robusta Cherry AB is an internationally recognised standard, which will give growers a benchmark to hedge other grades of coffee.
Inaugurating trading in the redesigned coffee contract, Union Minister of State for Commerce, Jairam Ramesh said, “The futures trading is launched to benefit small coffee growers in terms of price discovery, price stability and hedging.”

“The difference that the new futures contract will provide will be visible in the next six months,” said Mr Ravikumar. The NCDEX and Coffee Board  plans to add 10 state-of-art warehousing facilities for farmers by next month. This will help farmers cope up with the problem of physical delivery. The commodity exchange plans to rope in at least 40 per cent of the coffee farmers to start trading on the platform.

“Efforts are on to see that these small growers get about 90-95 per cent of the international coffee price for their produce,” said Mr Ravikumar. NCDEX has also lined-up plans to launch electronic spot exchange for coffee in Karnataka and Kerala. Mr Ramesh added, “It is important that the stocks markets and commodities markets are separate with the commodities market having their own regulatory body.”