Chana @

1. Chana @ NCDEX
Benchmark for the industry
The Pulses Conclave 2014 - GOA

2. Introduction - NCDEX

Owned by 14 distinguished National and Global entities

NCDEX holds 87% share of quantity traded in agriculture derivatives market

NCDEX has approved more than 500 warehouses PAN India with a storage
capacity of 2.3 mn MT

Participation of Value Chain from PAN India to discover fair price of the
commodity

NCDEXSPOT is providing an electronic auction platform to procure pulses by
Various state Govt to ensure nutritional portion in Mid-Day Meal and other
such Schemes

3. Trading in Physical Market - Need of Risk Management

Unregulated Forward contracts and hence there was always risk of
counter-party defaults

Liquidity in forward contracts is limited

Lack of far month forward contracts
Price
Inputs
daily volatility and daily basis forward
contracts
Output
Competitiveness
Measurable
Factors
Availability
Quantity
Quality
Seasonal Sensitivity, human
consumption

4. Average Price Annualized Volatility
45%
41%
40%
35%
31%
30%
28%
27%
25%
25%
20%
31%
22%
21%
17%
15%
10%
5%
0%
FY05
FY06
FY07
FY08
FY10
FY11
FY12
FY13
FY14

5. Tool for Risk Management

Regulated long term forward contracts with reference price model

Medium to ensure risk of counter-party defaults

Contracts with healthy liquidity

Availability of far month contracts for better price discovery

Models to hedge buffer stocks and purchases for efficient financial
planning
Price
Efficient Frontier Tools -
NCDEX
Measurable
Factors
Supply
Ensure Supply Consistency

6. Risk Management Tool – NCDEX
 MOST liquid CHANA futures contract in the World

Large no. of active clients for efficient price discovery

Stringent regulatory environment, hence ensuring honoring and smooth
settlements of contracts

Value chain can hedge their prices against their physical trades

Better price discovery in the far months

7. Average Open Interest and Ratio with Crop
300,000
An average Open Interest to crop ratio of 2.60%
6%
5%
200,000
4%
150,000
3%
100,000
2%
50,000
Million MT
250,000
1%
0
FY05
FY06
FY07
FY08
FY10
FY11
FY12
FY13
FY14
AD - OI
77,754 280,243 205,800 112,952 166,174 251,142 115,738 146,934 214,252
OI/Crop Ratio 1.36%
5.12%
3.67%
1.78%
2.35%
3.36%
1.41%
1.91%
2.41%
0%

8. Chana Performance
Average Daily Quantity Traded
300,000
273,089
Metric Tonnes
250,000
200,000
143,883
150,000
152,543
127,240
139,634
113,949
100,000
50,000
0
FY08
FY10
FY11
FY12
FY13
FY14

9. Annual Correlation between
Spot price and Futures Price of Chana
Financial Year
Correlation Coefficient
FY05
81.33%
FY06
95.35%
FY07
95.21%
FY08
94.62%
FY09
93.58%
FY10
91.73%
FY11
94.74%
FY12
98.47%
FY13
97.11%
FY14
93.29%

10. Annual Correlation between
Spot price and Futures Price of Chana
6,000
5,000
Rs. /Quintal
4,000
3,000
2,000
1,000
0
Apr-04
Apr-05
Apr-06
Apr-07
Apr-08
Spot Price
Apr-09
Apr-10
Future Price
Apr-11
Apr-12
Apr-13

11. Impact of NCDEX on Trading Ecosystem

Price Transparency

Efficient Risk Management tool for Value Chain

Price Dissemination

Infrastructure Development

Mandi modernization

E–Trading – FCI, STC, SFAC

Grading & Standardization

12. Looking Ahead

New Futures Contract on NCDEX

TUR

URAD

Yellow Peas

Direct Delivery

Exchange for Physical

Hedge Policy & Banks

Improved Warehousing

13. Thank You!!
CONTACT:
Customer Service Group:
: 02266406789
: askus@ncdex.com

14. Indian share of Chana across World
25
90%
80%
Production ‘million MT
20
70%
8.88
60%
15
50%
4.24
40%
10
30%
20%
5
10%
0
0%
FY02
FY03
FY04
FY05
FY06
World
Source: FAO Stat
FY07
FY08
India
FY09
% share
FY10
FY11
FY12
FY13

15. Introduction - Chana

India has produced almost 71% of Chana produced in world - last decade

We have recorded more than 100% increase in production from 4.24 mn MT
in FY03 to 8.80 mn MT FY13

Domestic production is growing at CAGR rate of 7.67% whereas imports at
CAGR rate of 29.91%.

Chana is the most grown, consumed and processed pulse in India and holds
about 44% share in total pulses produced

Export of pulses, except for Kabuli chana, was initially prohibited for six
months in 2006. It was then extended from time-to-time up to March 31,
2014.

16. Major milestones

Recorded highest value of 2893 Crores as on 23rd September
2011

Recorded highest quantity traded of 1.18 mn MT as on 22nd
March 2006 which is 18% of the total crop produced that year.

Recorded highest Open Interest of more than 5 Lakh MT on 30th
December 2005 which is 9% of the total crop in FY06.

Recorded a maximum participation of 3500 active clients in a
single trading day through a maximum of 500 members

17. New Initiatives

Exchange For Physical (EFP)

18. Exchange for Physical

Electronic form of forward contracts

EFP allows smooth exit with reference price model with
assured delivery from preferred supplier

Corporate Policy to lock in relative price risk on NCDEX to
eliminate defaults.

Merchandisers to transact relative price contracts (+/- NCDEX
Futures) with preferred suppliers

Banks to monitor/review hedging for loans

19. Advantages of EFP

Enables
Futures
risk
management
using
NCDEX

Delivery between the specific firms at mutually
agreed quality, location and premiums.

Prevents slippage loss; if each party closes
position independently

20. EFP process flow
Two Parties negotiate
physical deal: price,
quantity, location etc
Futures Positions
Exchanged/Closed
(Against Actual)
Physical delivery
20
The Parties hedge on
NCDEX futures
Parties approach the
Exchange and obtain EFP
approval