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National Commodity and Derivatives Exchange Limited (NCDEX) on Tuesday launched the futures contract on the index NCDEX SOYDEX for September and October expiries.
Today’s launch is the second successive offering in the sectoral indices in agri-commodities basket, the first being the NCDEX GUAREX, which was launched on August 16 of this month.
NCDEX SOYDEX is a price based index that tracks the price movement in the futures contracts of its underlying – soybean and refined soy oil on a real-time basis. The weightage of soybean and refined soy oil in the index will be 67.92 percent and 32.08 percent, respectively.
“Today’s launch of NCDEX SOYDEX futures contract comes at an appropriate time as the oil seeds segment has been experiencing volatility due to global and domestic fundamentals. NCDEX SOYDEX comprises soybean and refined soy oil, both these commodities are at the threshold of the new season. We are confident that the contract will evoke a very good response and soon become one of the well participated contracts in line with the underlying,” said Mr. Arun Raste, managing director and chief executive officer, NCDEX.
On July 05, 2021, NCDEX had launched the indicative or spot contracts for NCDEX SOYDEX along with NCDEX GUAREX disseminating the real-time values on its website. NCDEX SOYDEX futures is a cash-settled contract and provides an opportunity to participate in two commodities with a single trade, making it a low-cost tool serving the purpose of investing, trading or hedging the price risks in the underlying commodities.
“Being a cash-settled contract, NCDEX SOYDEX futures will get a wider acceptance among retail, portfolio and fund managers in addition to creating additional trading opportunities like arbitrages and calendar spreads with the underlying, for instance. Similarly, the contract offers a cost-effective tool for physical market participants engaged in India’s soymeal exports as well as imports of soft oils in large quantities.” said Mr. Kapil Dev, chief business officer, NCDEX.
India produces 10-12 million tonne of soybean annually. Madhya Pradesh and Maharashtra are the top two producing states together accounting for 70-75% of the country’s output. India is also a prominent importer of Soy Oil and exporter of Soymeal. In the current oil year ending October, India’s Soymeal exports are likely to reach nearly 2 million tonne.
NCDEX SOYDEX will require low margins relative to futures contracts in its underlying. The Index is a bundled offering that packages benefits like cash settled, low cost and ease to trade, thereby attracting all sets of participants.