NCDEX revives black pepper futures to boost India’s price discovery

NCDEX has relaunched black pepper futures after more than a decade, reviving one of its oldest commodity contracts and seeking to re-establish India as the global benchmark for price discovery in the spice.

India is one of the world’s largest producers, consumers and processors of black pepper, but lacks active regulated derivatives contracts despite the commodity’s importance, the exchange said. With no active global derivatives benchmark for black pepper currently in existence, the relaunch is expected to provide farmers, traders, exporters and processors with a transparent platform to hedge price risks and find market-based prices.

The contract will trade in one tonne lots, quoted at Rs per kilogram, with mandatory delivery to a warehouse in Kochi, India’s main pepper trading and processing hub. Kochi has been designated as the only delivery centre, which is allowed to deliver within a 60-km radius of the city’s municipal limits.

Historically, black pepper futures on NCDEX have seen strong participation from market participants across the value chain, with delivery at contract expiration consistently touching or close to 100%, indicating the contract’s close linkage to the physical market.

The relaunch comes at a time when commodity markets are witnessing increasing price volatility amid changing global supply chains and weather-related production risks. Industry participants believe that a regulated domestic benchmark can improve price transparency and provide an effective risk-management tool for the spice trade.

“While India is one of the world’s largest producers and consumers of black pepper, we have only slowly accepted our role in global price discovery of the commodity,” said Arun Raste, Managing Director and CEO of NCDEX. “The relaunch of black paper futures is an attempt to bring that benchmark home by creating a transparent, reliable and India-centric reference price for trading. A robust derivatives market will help farmers, processors, exporters and traders manage volatility more effectively while strengthening India’s position in the global spice ecosystem.”

NCDEX Chief Business Officer Kedar Deshpande said the absence of an active global derivatives benchmark has left a significant gap in the market. “The restart provides the entire pepper value chain – from growers to exporters – with a regulated platform for pricing and risk management, while strengthening India’s position in the global spice trade,” he said.

The launch is also part of NCDEX’s strategy to deepen its presence in South India and expand its commodity offerings linked to regional agricultural value chains.