SMX opens international Black Pepper Futures Contract
SMX also signs exclusive MOU with Vietnam’s largest Black Pepper exporter Phuc Sinh Corporation.
Singapore Mercantile Exchange (“SMX”), the first pan-Asian multi-product commodity and currency derivatives exchange, on Tuesday announced that it will launch the world’s first international Black Pepper Futures Contract (Contract Symbol: SMPEPPER) on its cutting–edge electronic trading platform with physical delivery-based settlement, as its first agricultural commodity derivatives product, according to an SMX report.
SMX has obtained approval from the Monetary Authority of Singapore (MAS) to list SMPEPPER on its trading platform. SMX is at present working with relevant industry partners to create awareness about the new Contract, while collecting their feedback to streamline the physical settlement procedure.
Mr. Thomas J. McMahon, Chief Executive Officer of SMX, commented: “Exhaustive research and close consultation with key industry players is one of our primary objectives. This latest contract constitutes noteworthy fruition of such efforts.” “We are listing the most commonly traded grade of Black Pepper, from discussions and partnerships with key exporters and importers both on a regional and global basis. Trading hours will span all major markets, providing exciting opportunities for price discovery leading to global benchmarking. Managing price volatilities is a very crucial factor in agricultural products such as Black Pepper, where markets are unpredictable. The marketplace seems excited by this latest development, and on our part agriculture commodity derivatives is a key segment for expansion,” Mr. McMahon added.
Mr. Vijaykumar Iyengar, Managing Director of Agrocorp International Pte Ltd, said: “Over the last two decades we have witnessed Vietnam overtake India as the world’s largest producer and exporter of Black Pepper. Overall the key producers are still in Asia, while the larger consuming nations are in the West. Such listings by SMX essentially bring all market players to the same table, ensuring efficient price discovery.”
Mr. Do Ha Nam, Chairman of the Vietnam Pepper Association, said: “Having a Black Pepper futures contract would give rise to natural price discovery which would benefit the entire value chain participants of Black Pepper.” Other key exporting nations of Black Pepper include Malaysia, Indonesia, Sri Lanka and Brazil. The U.S. is the largest importer of Black Pepper. Other large importing nations include Germany, Netherlands and Singapore. SMX obtained Approved Exchange status from the Monetary Authority of Singapore (MAS) in 2010 and went live for trading on 31 August 2010 with four products: Brent Crude Oil Futures (denominated in Euro), WTI Crude Oil Futures, Euro-US Dollar Currency Futures, and the first Gold Futures Contract with physical delivery-based settlement in Singapore. Multi-currency and multi-asset trading, clearing and settlement are available via the SMX platform, which offers multiple connectivity choices for global participation in addition to guaranteed settlement and delivery for a wide range of tradable assets.
The SMX on Tuesday likewise signed a Memorandum of Understanding (MOU) with leading international physical Black Pepper trader and Vietnam’s largest Black Pepper exporter, Phuc Sinh Corporation, in an exclusive partnership to explore advancement strategies for the global Black Pepper trading markets.
According to the MOU, the Exchange and Phuc Sinh will co-operate on development plans for specific segments within the entire supply chain of global Black Pepper markets, including but not limited to storage and delivery mechanisms and/or facilities.
SMX and Phuc Sinh have also committed to improving and sharing research, information and data to help grow the Black Pepper supply chain along with import and export marketplaces for agricultural commodities across the board.
SMX is at present working with relevant industry partners to create awareness about the new Black Pepper Contract, while collecting their feedback to streamline the physical settlement procedure.
Phuc Sinh, through ongoing cooperation within the MOU, will be a key partner in the development and growth of the SMX Black Pepper Futures market.
Mr. Thomas J. McMahon, Chief Executive Officer of SMX, said: “Aside from being a global leader in the pepper trades, Phuc Sinh is also active in a number of other commodity products where cultivation and production is predominantly Asian-based. As a pan-Asian platform for commodities, SMX has found itself a robust partner adding optimal value to existing market features, and we look forward to strong co-operative developments with Phuc Sinh.”
Mr. Phan Minh Thong, President of Phuc Sinh Corporation, said: “We are happy to sign this MOU with SMX and look forward to partnership opportunities. Aside from production and exports, we also own and operate all other elements of the supply chain such as storage, cleaning and lab testing. Thus we are able to contribute both knowledge and experience to this MOU, for the benefit of all the industry players.”
Phuc Sinh Corporation is Vietnam’s largest exporter of Black Pepper, shipping out 21,000 metric tonnes last year to more than 70 countries over five continents. Phuc Sinh alone accounted for 7% of the world’s total export volumes in 2009.
Aside from production, storage and cleaning facilities for Black Pepper, Phuc Sinh also owns and operates facilities for coffee, white rice, desiccated coconut, cashew nut, cinnamon and star aniseed among other agricultural commodities.