Commodity Analysis

Decoding NCDEX’s feed-grade bajra contract

| Updated on December 29, 2019 Published on December 29, 2019

The National Commodity Derivatives and Exchange (NCDEX) has relaunched future contracts on feed-grade bajra. The contracts will have Jaipur as the basis centre and Dausa and Alwar as additional delivery centres.

India is the largest producer of millets worldwide with more than 45 per cent share in global output. It produces, on an average, 85-90 lakh tonnes of bajra and has huge potential in terms of domestic trade, according to the exchange.

Rajasthan is the largest bajra-producing State, enjoying a market share of approximately 40 per cent. Uttar Pradesh, Gujarat, Maharashtra and Haryana are the other leading bajra-producing States. Bajra prices are volatile as several factors influence the price. The stakeholders, including farmers, millers, traders and exporters, are often exposed to price risk. Initially, the contract will be available for trade for expiries in January 2020, February 2020, March 2020 and April 2020. The exchange will launch further contracts as per the approved launch calendar. The minimum initial margin of the contract is 4 per cent.

Unit of trading: The unit of trading shall be 10 MT. Bids and offers may be accepted in lots of 10 MT or multiples thereof.

Basis price: The basis price shall be ex-warehouse Jaipur, exclusive of GST.

Trading hours: Currently, Mondays through Fridays — 09.00 am to 05.00 pm

Last day of trading: The 20th day of the delivery month; if the 20th day happens to be a holiday, a Saturday or a Sunday, the due date shall be the immediately preceding trading day of the exchange.

Mark to market: The outstanding positions would be marked to market daily based on the Daily Settlement Price, as decided by the Clearing Corporation.

Unit of delivery: 10 MT.

Quality specification: Moisture - 12 per cent, accepted up to 13 per cent with moisture adjusted weight (MAW) of 1:1

Foreign Matter - 2 per cent max

Damaged, immature/shrivelled grains - 5 per cent max, out of which ergot-affected grains shall not exceed 0.5 per cent by weight and weeviled grains not more than 1 per cent by weight. Other edible grains - 2 per cent max

Position limits: Member-wise: 8,80,000 tonnes or 15 per cent of the market-wide open interest, whichever is higher. Client-wise: 88,000 tonnes

Compiled by BL Research Bureau

Published on December 29, 2019
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