SMX creates world's first Black Pepper futures contract

This is also the first agricultural commodities futures contact for the exchange and will begin trading February 10.

Delivery will be mainly based in Vietnam, which is the global leader in black pepper production and exports.

"Vietnam dominates the world Black Pepper market, being the largest producer and exporter of the commodity with 33% & 43% global share respectively, and thus features as the basis delivery centre of the SMX futures contract. The basis grade is origin neutral 550 g/l black pepper, considering Indonesia, Malaysia and India are also major exporters of the commodity," SMX added in a release.

"The trading unit will be 5 metric tons and delivery unit will be 15 metric tons net weight (equivalent to three Futures Contracts), with a weight tolerance of +/-1%. Trading shall be conducted in all the calendar months. At a time four consecutive Contracts Months including current Contract Month will be available for trading. The delivery will be made Ex-Approved Bonded Warehouse within 50 km radius of Ho Chi Minh City, Vietnam," added SMX.

SMX said that with the Black Peper futures contract, it wants to create "a new global benchmark for a commodity predominantly produced and exported from the Asia Pacific region to the West."

“The World’s first Global Black Pepper futures contract, to be launched by the Exchange has gone through a rigorous industry validation process over the last two years. We are confident that this first agri commodity futures contract on the Exchange will be well accepted by the physical trading community. Going forward we expect to offer more such Asia centric products to facilitate price discovery and price risk management during the Asian time zone," said V Hariharan, CEO of SMX.

“The ensuing launch of the first global Black Pepper futures contract on SMX is going to be an important and pioneering milestone for price risk management and will benefit producers, traders and consumers alike. Through a transparent trading mechanism on the exchange platform and a reliable clearing and settlement mechanism facilitated by the clearing corporation, the contract should attract active global participation and act as a global price benchmark over a period of time," said Sunny Verghese, CEO, Olam International Ltd.

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

Tags: Singapore Mercantile Exchange, SMX, Black Pepper futures contract