Issue 3 - American Palm Oil Council

Grassroots education
Apart from CPO and soybean oil,
exchanges in India trade on groundnut
(peanut), castor, sunflower and
rapeseed/mustard (canola) oils. Of these,
rapeseed oil is the only one traded
globally. But the domestic exchanges have
liquid contracts for all these oils.
A look at the prices in 2005/06 reveals
that most of the agri-commodities have
mirrored the bull-run across the sector.
Few commodities have shot up as high as
170%. This was the period when
commodities, be it agro or metals or
energy, were rallying worldwide.
Liquidity over the exchanges has gone up
thrice that of 2004. Commodities, which
have a physical market size of US$200
million, are now trading with the same
volume over the exchanges in a single day.
In most, the rally turnaround time was as
low as one month. Although the retail
investor in India has still to come to terms
with such volatility in commodities that
affects them directly, the markets are
growing and maturing by the day.
NCDEX, which
commenced
operations
on Dec
15,
2003, has a daily turnover of over US$2
billion. It offers the entire range of 50
commodities in the agro, metals and
energy sectors. It pioneered spot price
polling to facilitate Indian participants in
the futures market and made its mark
globally through tie-ups with the Dalian
Commodity Exchange, the Tokyo Grains
Exchange and the International Petroleum
Exchange.
NCDEX is also spreading awareness and
taking the commodity markets to the
grassroots so that farmers, the real hedgers,
can benefit. Price Ticker boards are put up
in every possible location including post
offices, bus stands and panchayat (village
governing bodies). Millions of rupees are
being spent in the first three years on
awareness programmes conducted
by product and relationship
managers and
economists.
In addition, 300 weather stations (other
than those set by the government) have
been set up to date by NCDEX associate
companies, since Indian agriculture is
largely monsoon dependent. Although the
farmers haven’t come to trade on the
exchange platform, they are aware of
NCDEX, ask for the price quoted on it,
uphold their selling decisions looking at
futures prices on NCDEX and make
informed decisions. NCDEX realises that
the spread of price information is the
most vital link in empowering farmers.
Shilpa Jain
Economist
NCDEX India
The writer is grateful to Mr Madan Sabnavis,
Chief Economist, NCDEX Ltd & Mr Tapan Mishra,
Asst Vice-President, Products, for their usefull comments & suggestions.
GLOBAL OILS & FATS BUSINESS MAGAZINE •VOL.3 ISSUE 3, 2006 21