MCX potato futures launch enthuses north traders

With Multi Commodity Exchange (MCX) all set to launch futures trading in potato from March 9, traders and farmers in North India are expected to benefit in a big way.

The major potato markets in the North are situated at Jallandhar, Ludhiana, Hoshiarpur, Phul and Patiala in Punjab, Agra, Kanpur, Meerut and Farrukhabad in UP and Shahbad in Haryana.

Jagjit Singh Arneja, operations manager of Ludhiana Stock Exchange Commodities Trading Services, said: "The major beneficiary would be the traders and farmers of Uttar Pradesh since the variety of potato - 3797 - which is set to be traded on the MCX - is mainly produced in that state. Punjab mostly produces the Kufri variety, which has currently not been included in the contract. With online trading gaining momentum, farmers here would also start growing the 3797 variety as the environment here is conducive to its growth.

"As the volumes increase in potato trading, we hope that MCX would also include the Kufri variety for futures trading as it is produced in large quantities in the region. The reason why the exchange has not included Kufri is that it has comparatively lesser shelf life because of its thin skin. Kufri, however, is nutritionally superior and free from internal and external defects. We are optimistic that the exchange will include other varieties of potato and also set up a warehouse, apart from Agra, in Punjab very soon."

Gaurav Joshi, commodities analyst at Chandigarh-based Vikson Finance and Investments, said: "A lot of enquiries are generated daily about the futures trading in patato in our branches in Punjab and Haryana. As for the contract, the minimum lot size would be 30 tonne, and an initial margin of 5-10% would be required. Presently, potato is traded at about Rs 400 to 450 per quintal, and trading is expected to begin at the same rate."

Joshi added that response is expected to be good as farmers have good knowledge of the crop and are expected to reap good profits. "Moreover, there are large traders in the Chandigarh market, and they are preparing to trade in the commodity in a big way," Joshi said.