New Delhi [India], August 14 : Multi Commodity Exchange of India (MCX) has introduced futures contracts on crude sunflower oil, providing importers, refiners, processors and traders with an exchange-traded mechanism to manage price risks in a segment where India meets most of its requirement through imports.
India's annual crude sunflower oil consumption is estimated at around 3 million tonnes, of which nearly 2.8 million tonnes are met through imports, according to a press release issued by MCX on Friday. Sunflower oil accounts for approximately 9 per cent of the country's edible oil consumption.
The high dependence on overseas supplies makes the segment particularly sensitive to movements in international prices and global supply conditions.
"The introduction of the Crude Sunflower Oil futures contract will provide market participants with a transparent and efficient exchange-traded mechanism to manage price exposure, while strengthening the development of the domestic edible oil market," MCX Managing Director and CEO Praveena Rai said.
The launch also comes as India remains heavily dependent on imports to meet its overall edible oil demand. The country consumes an estimated 26-27 million tonnes of edible oil annually, with more than 60 per cent of the requirement met through imports.
According to the exchange, this import dependence exposes the domestic market to global price movements, international supply-demand dynamics, currency fluctuations and changes in prices of competing edible oils.
The new crude sunflower oil futures contract is aimed at allowing participants across the edible oil value chain to hedge against such price volatility and improve their risk-management strategies.
The contract will be cash-settled, with prices quoted on an Ex-Tank Jawaharlal Nehru Port Trust (JNPT) basis, excluding applicable sales tax and Goods and Services Tax.
MCX said the introduction of the contract would also support price discovery and enable participants across the value chain to better manage commodity price risks.