Coffee exchange plans to join national bourses

The Coffee Futures Exchange of India Ltd, hit by poor trading volumes, plans to join one of India's leading commodity exchanges as a member, a senior exchange official said Wednesday. It is in talks with National Commodity Derivatives Exchange, Multi Commodity Exchange, and National Commodity Multi-Commodity Exchange in this connection.

Trading in coffee futures on COFEI had stopped a year ago owing to a sharp fall in volumes,said the senior official.

"The lack of participation by coffee traders led to the fall of the exchange," he said.

On an average, the exchange used to trade around 1,000-1,200 lots (1 lot=1,000 kg of raw coffee and 1 lot=600 kg of clean coffee) with a turnover of almost 15 million on a daily basis.

"Merger may not be possible, but we can become members of the exchange. The talks are on, but nothing concrete has materialised," the official said.

The officials of the exchanges where COFEI plans to be a member were not available for comment.

Some coffee traders said that one of the reasons why COFEI could not attract enough trading volumes was the exchange had failed to attract corporate houses, small-time traders and growers.

"The exchange primarily used to function within a closed circle of traders and exporters," said a Banglore-based trader.

Another reason for its failure was that overseas commodity players were not allowed to trade on COFEI.

"Coffee is primarily a exportable commodity, with India exporting almost 80 per cent,"said an exporter from Karkala, Karnataka.

COFEI, incorporated in 1997 at Bangalore, the hub of India's coffee trade, did see a lot of interest initially as the country didn't offer a single organised platform for coffee futures at that time.

The main focus of the bourse was to provide hedging opportunities and a platform for guaranteed delivery of coffee.

COFEI facilitated online trading in all major categories of coffee and was the first to introduce futures trading in raw coffee in the world.