CEO of Iran Mercantile Exchange

Trading Futures Contracts on Pistachio for the First Time in the World

There is no futures contract on pistachio in any commodity exchange in the world and today the first futures market in the world for pistachio was launched in Iran; the reason for the lack of futures markets for products like pistachio and saffron in the world is the Iran’s comparative advantage of producing these two products. Therefore, by launching new trading tools, Iran can become the price reference of this product in the world.
Trading Futures Contracts on Pistachio for the First Time in the World

According to the report by the IME’s International Affairs and PR, the opening ceremony of pistachio futures contracts was held with presence of Ali Akbar Mehrfard, Deputy Minister of Agriculture Jihad, Shapour Mohammadi; Head of the Securities and Exchange Organization (SEO), Mohammad Reza Pour Ebrahimi; Member of Iranian Parliament Committee on Economic, Hamed Soltaninejad; CEO of the Iran Mercantile Exchange and a group of senior managers in Iran’s capital market and pistachio market participants.

At the beginning of the ceremony, the CEO of IME appreciated the support provided by the Securities and Exchange Organization (SEO), the Iranian Parliament, the Ministry of Agricultural Jihad, and the pistachio market participants for the entry of pistachio into the IME’s market and said securitization and development of derivative instruments, introduction and deployment of diversified financing and trading instruments, expanding the size and depth of markets for specified commodities for the purpose of being the price reference, and expanding activities to enhance the country's trade with international markets are the most important strategies of IME in the agricultural sector.

Hamed Soltaninejad, pointing to trading value of 125,000 billion rials for futures contracts on agricultural commodities since the beginning of the hijri year, added: "Fair price discovery, providing agricultural finance, providing the opportunity of production planning and the price fluctuation hedging are the IME’s targets in this area and the launch of futures contracts is a major step towards achieving these goals.”

He described the benefits of the futures contract for agriculture market as risk coverage, fair price discovery, liquid transactions, guaranteed transactions through the IME’s clearing house, financial leverage and low transaction costs. In line with that, during the previous hijri year, futures contracts on saffron and cumin seeds were initiated and today, the pistachio futures are launched.

Sultaninejad, referring to the history of trading pistachio on the IME, said that the pistachio is selected for these deals because of the comparative advantage of production, standardization, being export-oriented, continuous demand and mass production. During year 1396 hijri, certificates of deposit for 123 tonnes of pistachio and in year 1397 hijri certificates of deposit for 57 tonnes of pistachio were trade through the IME and in year 1398 about 25 tonnes of this product has been traded, up to now.

He further referred to the global experience of launching derivative contracts on agricultural products such as cumin seeds in Indian and stated that there is no futures contract in the world for pistachio, and today the first futures market in the world for pistachio was launched in Iran; the reason for the lack of futures markets for products like pistachio and saffron in the world is the Iran’s comparative advantage of producing these two products. Therefore, by launching new trading tools, Iran can become the price reference of this product in the world.

Soltaninejad pointed to the ME’s measures in the year 1398 hijri on the pistachio product and said: “Listing the Talaye Sabz Zarand Company in Zarand and Sabz Daneh Kavir Company in Sirjan as well as negotiations with other private companies and cooperatives in Kerman, Rafsanjan, Semnan and Khorasan provinces, and holding training courses are among the most important steps taken by the IME in this regard.”

The CEO of IME pointed to the pistachio futures contract specifications and said that the first futures contract of Fandoghi pistachio (grade 30-32) will be launched for delivery on December 2019, which is 100 kg per contract. The maximum volume of each order is up to 25 contracts and the daily maximum price volatility is -/+ %5 with respect to the daily settlement price of the previous day.

Author: International Affairs and PR

ID: 50072212

Published on: Monday, October 14, 2019 11:10

Source: Iran Mercantile Exchange

View count: 171

Saturday, January 16, 2021 10:28

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