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The National Commodity and Derivatives Exchange (NCDEX) will re-launch the Robusta Cherry AB Coffee Futures contract from Friday.
Initially, monthly contracts expiring in the months of next February, March and April would be available for trading. The contract will be a compulsory delivery contract and deliverable at Kushalnagar in Karnataka.
Arun Raste, Managing Director and Chief Executive Officer, NCDEX, said the production of coffee is dominated by small growers in the south Indian States, who are vulnerable to price volatility in the domestic market due to its global linkage.
The contract being launched would enable these growers to hedge their price risks, individually and collectively. Moreover, as the commodity has a strong global footprint, it would provide coffee value chain participants with an indigenous source of benchmark pricing, he said.
Daily price limit
The contract will have a daily price limit of 6 per cent, which means once the price reaches 4 per cent cap on either side the trading will be halted for a cooling period of 15 minutes, after which another 2 per cent movement can be allowed on the same side until the end of the session. The lot size of the contract has been fixed at 1 metric tonne in line with physical trade in the commodity.
At around 350,000 tonnes per annum, India accounts for 3.5-4 per cent of the global coffee output pegged at around 10 million tonnes. Karnataka accounts for nearly 71 per cent of the country’s total production followed by Kerala at 21 per cent and Tamil Nadu at 5 per cent. Nearly 65 per cent of the output is exported and the rest is consumed in the country. The demand for coffee has been growing in the domestic market as well and so is the expansion of plantations in non-traditional areas of Andhra Pradesh, Odisha and North-Eastern states.
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