Commodity exchange ‘National Commodities and Derivatives Exchange of India’ (NCDEX) plans to set up about 1,000 warehouses dedicated to its Forward contracts over a period of two years, top exchange officials informed here.

The exchange hopes to rope in private owners and agencies providing small warehouse services, from different regions of the country, to set up the warehousing facilities.

“There is an increasing interest from farmers for NCDEX forward contracts. We already have about 500 ware houses for futures contracts, but we will require additional 1,000 warehouses for the forward segment,” NCDEX MD Samir Shah said. For the Forward segment, the exchange would require relatively smaller warehouses for storage of the commodities are different locations.

According to Shah, the exchange has already registered 20 Farmer Producer Organisations (FPOs) under it as its member as Commodity Participant Members (CPM). “There are several FPOs in the pipeline to be given membership. In the next two months, we will have about 35-40 FPO members,” Shah said, adding that farmer participation in the latest Forward contracts has been increasing.

Unlike futures contracts, where contract specifications are standardised, Forward contract allows buyers and sellers (farmers) the flexibility to trade with diversified requirements while reaching out to any buyer or seller throughout the country.

“This mechanism reduces overhead costs and reduces counter-party default risk, therefore it is getting more popular among farmers,” he added.

NCDEX offers Forward contracts in 26 commodities including pulses, which are not allowed in the Futures segment. NCDEX Futures segment has 21 commodities.

Since its launch last year, the exchange has executed total 7,000 tonnes of commodities on the Forward segment.

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