The first global pepper futures launched by the Singapore Mercantile Exchange (SMX) on 10 February 2012 could rival the pepper futures market in India.
Currently India’s Malabar Garbled pepper is a global benchmark but the scale could be tilted towards Vietnam, the new centralized exchange, if Vietnam attracts more participants, exporters and said the trader.
Pepper futures prices on the Indian National Commodity Derivatives Exchange (NCDEX) are recognized by other pepper producing countries. However, the new exchange with more liquidity could change the influence because Vietnam is the world’s largest producer and exporter of pepper.
At the new exchange, the delivery will be through a bonded warehouse in Vietnam. “If Vietnam can attract more participants and increase liquidity, the global pepper futures market can succeed. Since part of the transaction ends in the delivery, speculation can only grow with high liquidity,” said Philip Kuruvila, a spice exporter and former president of the forum of domestic exporters. Indian taste. But the question is whether Vietnam has enough experience in futures trading.
“They will trade 550 Gr/l black pepper from any growing country. If the transaction is successful, it could become a popular commodity. The new exchange could be backed by Singapore-based Olam International, which has a major influence on the global spice market. It will be an advantage,” said Kishor Shamji, a major pepper exporter and former president of the Pepper and Spices Trade Association of India. Olam International acquired the Indian spice business Vallabhdas Kanji a few months ago.
The new exchange is mainly aimed at Vietnam, said Greojit Comtrade, CEO of CP Krishnan. Indian executives can have a say if they form joint ventures with the Vietnamese government or other countries.
“We will wait and see. From a quantitative perspective, Vietnam has the advantage and is also the largest exporter. But these factors do not necessarily lead to success in futures trading,” said Vijay Kumar, head of trading at NCDEX.
The futures price of pepper in NCDEX is now recognized by other pepper producing countries as a benchmark price to gauge the ups and downs of the market.
Follow PK KRISHNAKUMAR – Kochi
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