The National Commodity and Derivatives Exchange Ltd (NCDEX) on Monday commenced trading in rapeseed mustard oilcake futures, designed as an effective hedging tool and transparent price discovery mechanism for participants. The first two days of the contract received good interest from participants.

The RM seed oilcake contract for May delivery was launched on April 24, and about 3,550 tonnes were traded on the first day, with open interest of 1,080 tonnes. On Tuesday, about 1,260 tonnes were traded, with open interest at 1,470 tonnes.

However, the prices remained flat, with a marginally negative move at ₹1,829 on Tuesday.

“This (contract) will give the mustard value chain participants an effective tool to manage their price risk and get transparent price signals,” said Samir Shah, MD & CEO, NCDEX. “The addition of rapeseed mustard oilcake to the product basket is aimed at offering a wholesome risk management offering.”

RM seed oilcake is a compulsory delivery contract and is included in the ‘List C’ commodities, with a transaction charge of ₹0.10 per lakh of trade and no risk management fee, making it a highly cost-effective contract, NCDEX noted.

Rapeseed mustard seed oilcake (symbol: RMCAKE, basis: Jaipur), expiring in May, June, July and August 2017, have been made available for trading from April 24. The delivery centres are Jaipur, Alwar, Kota and Sri Ganganagar.

Mustard seed comprises about 60-65 per cent of cake and the availability of an intermediary price benchmark is seen as helping the entire value chain, including farmers, traders, millers, exporters and the feed industry.

The oilcake is produced by crushing mustard seed, and is used as cattle feed; the deoiled cake (DOC), obtained by processing the oilcake, is exported.

India is among the top three producers of mustard seed and one of the leading exporters of DOC, and experts believe a national price benchmark will help the feed industry.

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