Multi Commodity Exchange of India (MCX), on Wednesday, commenced futures trading in refined, bleached and deodorized (RBD) Palmolein enabling participants to hedge against price volatility in the physical markets.
The new contract, adds to the existing agri products being traded on MCX platform.
Currently, RBD palmolein futures for May, June, and July 2017 contracts is launched with 10 MT as the trading unit and Kandla (Gujarat) as the basis centre, MCX informed in a statement.
Mrugank Paranjape, MD and CEO, MCX, said, “We believe RBD palmolein futures contract is an excellent risk management product for palm refiners, end users of palmolein and its importers. Since international oil prices continue to exhibit highly volatile patterns, they affect domestic edible oil industry players, and any adverse movement in prices could make the business unviable because of the industry’s extremely thin margins."
Transaction charges on RBD Palmolein futures contract is Re 1 per Rs 1 lakh of turnover.
Soon after the launch, the RBD palmolein futures contract garnered good response with traded volumes and open interest clocking at 2,330 MT and 890 MT respectively, as of afternoon trades.
India is one of the world’s largest vegetable oil importing countries of which palm oil accounts for 70 per cent of the total edible oil imports. India imported roughly 5.75 million tonnes of palm oil and roughly 2.62 million tonnes of RBD Palmolein during 2015-16.
Reacting to the launch of the contract, BV Mehta, Executive Director, The Solvent Extractors’ Association of India (SEA), said, “We welcome the new ‘RBD Palmolein’ futures contract launched by MCX today, as it gives the industry participants an effective instrument to hedge against the risk of unfavourable price movement in the physical market and also aid corporates to protect their refining margins. Together with the successful CPO contract, refiners can now lock in their wafer-thin margins.”
According to United States Department of Agriculture (USDA), the world palm oil production projection in 2016-17 is 63.86 million tonnes as against 58.84 million tonnes in 2015-16.