Tuesday December 5, 05:49 AM
MCX plans coffee futures with night trade
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By Ajayan
More than a year after coffee futures in the country met with a major snag and never came out of that, another leading exchange has sought the approval of the Forwards Market Commission (FMC) to launch coffee futures. The request of the MCX is before the FMC, though exchange officials refused to comment on it. The proposal was subject to trade times so that night trade in the commodity was allowed. While there was minor quality issue in connection with delivery that catalysed the failure of the coffee futures earlier, a major issue before the traders was the market closed at 5 pm when the trade in major exchanges like London International Finance and Futures Exchange (Liffe) closed around 7.30 pm (IST) and New York Board of Trade (Nybot) around 11.30 pm.It is learnt that MCX after a series of deliberations with growers, brokers and exporters has proposed linking the trade with that in Liffe which is into robusta futures. It has been proposed to have an Indianised version of the contract specifications for the robusta cherry were expected to be ideal to meet the Liffe quality norms now fixed to meet Vietnamese coffee, said a leading exporters. The quoting price would be linked to Liffe, giving the traders the advantage of settling at the base price. Growers and exporters who attended some of the deliberations said that it was part of the MCX strategy to get into internationally traded commodities and coffee was among the largest commodities traded globally in the futures market. India had share of around 4% in the global coffee market, though around 80% of the over 3 lakh tonne of annual coffee production went into exports. Presently, traders here did not get the advantage of international futures trade as the FMC was not in favour of allowing night trade. But traders here said that any futures trade in the commodity would have to be around the time the major global exchanges functioned. It is learnt that one of the major suggestions of MCX for the permission for coffee futures was allowing trade times to match those of Liffe. In case the FMC gives the nod and since coffee could not be treated purely as an agricultural commodity there could be no hassles in allowing night trade, trade here could hedge with international price parity. Also, the international exchanges would start looking at Indian prices at the start of their trade, said a leading exporter. Since several were trading on the international exchanges, denying them an opportunity here would mean promoting parallel and unauthorised trade, he added.
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