India is the largest consumer of pepper in the world and the second-largest producer after Vietnam.
India is the largest consumer of pepper in the world and the second-largest producer after Vietnam. Photo | Express

Pepper trade association to start online spot trading from May 31

The newly launched online e-auction platform for black pepper gives participants the power to trade anywhere, anytime.

KOCHI: The Indian Pepper and Spice Trade Association (IPSTA), the world’s oldest pepper exchange for trading pepper futures, is all set to revive and launch online spot trading from Friday.

The iconic regional exchange, formed in 1957, was once a market maker and price setter for the commodity. However, it exited futures trading in 2018 as volumes dwindled and members stayed away following the launch of national multi-commodity futures exchanges.

Futures are contracts that involve an agreement to buy or sell a specific commodity, asset, or security at a predetermined price on a specified future date. This mechanism aids farmers and traders in managing market risk through hedging.

India had single-commodity regional exchanges as early as 1893. National-level electronic multi-commodity exchanges for futures trading in agricultural commodities, initiated by the government in 2003, also ceased trading pepper futures by 2021.

The decline in the fortunes of the IPSTA exchange also coincided with the arrival of Vietnam in pepper production and the gradual shift of trade from the terminal market of Kochi.

India is the largest consumer of pepper in the world and the second-largest producer after Vietnam. Formerly, India was the biggest producer of pepper with an annual production of 60,000-80,000 tonnes until Vietnam started production and outran it with production above 150,000 tonnes.

Jojan Malayil, former chairman and current director of IPSTA, said that the revival of trading by IPSTA is a good opportunity for both traders and farmers alike.

The newly launched online e-auction platform for black pepper gives participants the power to trade anywhere, anytime. Currently, the price of pepper is determined by IPSTA by taking daily quotes from 10-12 traders in Kochi and averaging it.

Sellers should deposit pepper with the designated warehouse, and only after that will IPSTA allow participation on the trading platform. Each buying and selling transaction will be settled on a trade-to-trade basis and result in compulsory delivery.

Pepper prices on closing at May 30 stood at Rs 598 per kg for 500 GL grade as per IPSTA site.

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The New Indian Express
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