Kolkata: National Commodity and Derivatives Exchange Limited (NCDEX) on Monday launched the futures contract on NCDEX GUAREX, India’s first sectoral index in agri-commodities basket.
NCDEX GUAREX is a price based index tracking the price movement in the futures contracts of its underlying i.e. Guar Seed and Guar Gum Refined Splits on a real-time basis. The weightage of Guar Seed and Guar Gum Refined Splits in the index will be 63.43 percent & 36.57 percent, respectively.
“I take pride in announcing the launch of NCDEX GUAREX futures – India’s first sectoral agri-index futures contract. I am sure the contract will garner interest from all sets of participants, including the physical market participants,” said Mr. Arun Raste, managing director and chief executive officer, NCDEX.
The exchange had launched the indicative or spot contracts for NCDEX GUAREX on July 05, 2021 disseminating the real-time values on its website. GUAREX futures is a cash-settled contract and encompasses an entire sector within one product. Initially, NCDEX GUAREX futures contracts expiring in September 2021 and October 2021 will be made available for trading.
“NCDEX GUAREX will soon be able to establish itself as a benchmark for the Guar Complex, both in the domestic and international markets, making it a value proposition for Eligible Foreign Entities, to hedge their price risk on Indian bourses,” Mr. Arun Raste added.
“GUAREX Futures is a price-based index and hence has immense potential while adopting different trade strategies such as arbitrage and calendar spreads. A cash-settled product which is easy to trade will not only appeal to retail participants but will also reckon with the requirements of the institutional players like mutual funds” said Mr. Kapil Dev, chief business officer, NCDEX.
India is the world’s largest guar producer accounting for 80-85 percent of the world’s output while the state of Rajasthan is the country’s top producer with 80 percent market share in the domestic market. The state government data showed that the sowing of guar seed was at 1.81 million hectares so far this year, down from 2.25 million hectares for the corresponding period last year.
India exports the bulk of the guar in split or flour form called guar gum that is mainly used by the Oil & Gas industry in shale oil facilities. Guar gum is also consumed by food, pharma, paint and other industrial sectors. India’s Guar Gum exports have fallen year on year by 30 percent in the last two years.