The Hindu Business Line : MCX delivers 120 tonnes coffee

Mumbai April 4 The first coffee robusta contract launched in MCX expired on March 30 with a delivery of 120 tonnes. Futures trading in coffee was launched on January 29, 2007.

"The delivery intention period was for a month to overcome logistic problems pertaining to bulk handling and storage. There is a provision that once a seller's stock is validated by the exchange, actual delivery can take place on any of the tender days as per the seller's choice. All open positions at the end of contract expiry result in compulsory delivery," said an MCX official.

Maximum allowable position limits for members and clients in the commodity is 2,250 tonnes and 750 tonnes, respectively. However, in the delivery period, the maximum allowable position limits are reduced to 450 tonnes and 150 tonnes for members and clients, respectively.

Robusta contracts are traded on MCX platform up to 11.55 p.m. to coincide with international market timings as coffee is a global commodity with global reference pricing.

Benchmark price

After a series of discussions with domestic planters, traders, processors and exporters, MCX had decided to launch the Euronext.liffe based Coffee Robusta contract as Indian exporters were selling their coffee using the Euronext.liffe based contract price as the benchmark.

The final settlement price of MCX is linked to the Euronext.liffe, giving the traders the advantage of global benchmark price.

MCX Robusta coffee has four delivery centres, three in Karnataka — Kushalnagar, Chikmangalur and Hassan — and one in Kerala — Kalpeta, where National Bulk Handling Corporation (NBHC) maintain warehouse for coffee industry participants trading on MCX. The contract has attracted good interest from the domestic coffee industry.

"All the three verticals — metals, energy and agriculture sector — have registered a good growth in turnover. More importantly, our business has managed to register growth despite volatility due to a mismatch in supply-demand. End users have started using our platform to hedge their risk," said Mr Joseph Massey, Deputy Managing Director, MCX.

Without putting any target for the coming fiscal year, Mr Massey said, "We want to grow organically by introducing more new products and align with the physical market.

Many decisions like allowing mutual funds, banks and financial institutions in the futures market are still pending Government clearance. Our business will improve further once the Government decides on this".

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