MCX launches trading in Black Pepper Futures

Mumbai, July 24, 2017: In a bid to expand its agri product suite and further contribute to the growth of agriculture market in India, Multi Commodity Exchange of India (MCX), India’s No. 1 commodity exchange, today, launched trading in Malabar Garbled Black Pepper futures contract.

Currently, September, October & November Black Pepper contracts will be available for trading on the Exchange, with 1 MT as the trading unit and Kochi (Kerala) as the basis centre. The transaction charges on Black Pepper futures contract is Rs.5/- per crore of turnover.

MCX recorded volume of 313 MT, till the time of going to the press. (at 3.20 pm)

In addition to serving the most important role as a price risk management tool, black pepper futures contract will also help planters by empowering them to make better cropping, selling decisions, improving flow of information across the entire crop ecosystem, developing better storage and grading infrastructure and improving access to finance. MCX’s pepper futures contract is a healthy reflection of the spot market and is equipped with a robust warehousing and delivery mechanism. It will provide a viable hedging platform to the entire gamut of black pepper value chain participants such as, traders, planters, importers, exporters wholesalers, and retailers who are exposed to price risk due to domestic & international factors.

India majorly imports Pepper from Vietnam—the world’s largest producer and exporter of pepper, producing more than 1/3rd of the world’s Pepper crop, Sri Lanka and Indonesia and occasionally from Brazil. Largely, the pepper imported into the country is re -exported in form of Whole Black Pepper only. Other than culinary, black pepper finds its applications in pharmaceutical industry, nutraceutical, oleoresin, along with its extensive usage as a preservative.

Mr. Mrugank Paranjape, MD and CEO, MCX said, “Market participants were looking out for a Pepper futures contract as an avenue where they can hedge their price risks, and also be able to track prices and deliver the commodity. With the feedback from the market, we have designed a contract that is an appropriate reflection of the physical market, enabling us to attract the stakeholders to hedge in the contract, with confidence. We already have a presence in the spices market through our Cardamom futures contract and now the Black Pepper contract will enable us extend the presence in India’s spices market.”

Mr. Heman Kuruwa, Proprietor, Hemanand Spices said, “Commodities such as Black pepper carry additional risk of seasonal arrivals and price fluctuations, attracting lower prices during harvest season. Changing economic environment, changing demand and supply position of agricultural commodities and growing international competitions require an efficient platform for risk management and price discovery, signifying a wider role for futures markets in an agricultural economy. In this regard, the efforts of MCX in launching Black Pepper futures contract as an efficient risk minimizing tool is appreciable.”

More than 70 % of black pepper is exported to Countries such as US, UK and Canada. Other countries including European Union countries contribute other 30% of total exports from India. The International Pepper Community (IPC) projection for 2017 has put the world output at 4,18,604 MT compared to 3,97,153 MT in 2016. The production in 2016-17 season is expected to remain stable due to erratic rains in Kerala. As per Spices Board of India the estimates for 2016-17 is 55,500 MT compared to the previous year’s production of 48,500 MT.

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OdishaInc Bureau