The National Commodity and Derivatives Exchange(NCDEX) initiated a futures contract on the NCDEX SOYDEX index for September and October expiries on 29-8-2021.
The NCDEX GUAREX, which was launched on August 16 of this month, is the second successive offering in the sectoral indices in the agri-commodities basket.
The NCDEX index is a price-based index that tracks the price fluctuations of its underlying – soybean and refined soy oil – in real-time. Soybean and refined Soy oil will be weighted at 67.92% and 32.08%, respectively, in the index.
‘The launch of the NCDEX SOYDEX futures contract today comes at an opportune time, as the oilseeds segment has been volatile due to International and Domestic fundamentals. NCDEX SOYDEX includes soybeans and refined soy oil, both of which are nearing the start of the new season. We are confident that the contract will elicit a strong response and quickly become one of the most actively traded contracts in line with the underlying,’ said Arun Raste, MD and CEO of NCDEX.
‘Because it is a cash-settled contract, NCDEX SOYDEX futures will gain traction among retail, portfolio, and fund managers, as well as provide additional trading opportunities such as arbitrages and calendar spreads with the underlying. Similarly, the contract provides a cost-effective tool for physical market participants involved in India’s soymeal exports as well as large-scale soft oil imports.’ Mr. Kapil Dev, NCDEX’s chief business officer, stated.
Every year, India produces 10-12 million tonnes of soybeans. Madhya Pradesh and Maharashtra are the country’s top two producers, accounting for 70-75 percent of total output. India is also a major importer of soy oil and a major exporter of soymeal. India’s Soymeal exports are expected to reach nearly 2 million tonnes in the current oil year, which ends in October.
In comparison to futures contracts in its underlying, NCDEX SOYDEX will require low margins. The Index is a bundled offering that bundles benefits such as cash settlement, low cost, and ease of trade, attracting all types of participants.