Singapore Mercantile Exchange (SMX) today announced that it will launch the world's first international black pepper futures contract on its electronic trading platform with physical delivery-based settlement, as its first agricultural commodity derivatives product.
SMX has obtained approval from the Monetary Authority of Singapore (MAS) to list the contract on its trading platform.
At present SMX is working with industry partners to create awareness about the new contract, while collecting their feedback to streamline the physical settlement procedure.
SMX Chief Executive Officer Thomas J McMahon said: "Exhaustive research and close consultation with key industry players is one of our primary objectives."
"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," McMahon said.
"Managing price volatilities is a very crucial factor in agricultural products such as Black Pepper, where markets are unpredictable. The marketplace seems excited by the latest development, and on our part agriculture commodity derivatives is a key segment for expansion," he added.
On the launch, international commodity trading company Agrocorp International Pte Ltd's Managing Director Vijaykumar Iyengar, said: "Overall the key producers of black pepper are 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."
Vietnam Pepper Association Chairman Do Ha Nam added: "Having a black pepper futures contract would give rise to natural price discovery which would benefit the entire value chain participants of Black Pepper."
According to SMX, the list of the key black pepper exporting nations of include Malaysia, Indonesia, Sri Lanka and Brazil.
The US is the largest importer of black pepper. Other large importing nations include Germany, Netherlands and Singapore, it said.
