Wheat

Multi Commodity Exchange of India Ltd (MCX) is a demutualised exchange with permanent recognition from the government of India. MCX offers futures trading in 55 commodities including bullion, energy, grains, plastics, metals, oil and oilseeds, fibres, spices, pulses, sugar, plantations and carbon credits as on March 31, 2009. The average daily turnover on the MCX platform was Rs. 14,896.41 crore during fiscal 2008-09.
INTRODUCTION
India is one of the main wheat producing and consuming countries of the world. After the Green Revolution in the 1970's and 1980's the production of wheat has shown a huge increase. Punjab and Haryana yield the highest amount of wheat because of better irrigation facilities. The wheat crop needs cool winters and hot summers, which is why the fertile plains of the Indo-Gangetic region are the most conducive for growing it.

GLOBAL AND INDIAN SCENARIO

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MCX is No. 1 commodity exchange in India, with a market share of over 88%
(as on March 31, 2009)

EU-27, China, India and US, are the four largest producers accounting for around 60% of the total global production. The major consuming countries of wheat are EU, China, India, Russia, USA and Pakistan. Global balance sheet remains comfortable. World production is estimated to be 657.6 million tones and the ending stocks are estimated to be 181.9 million tones, highest since year 2000, when it was recorded at 203 million tones. India has the largest area in the world under wheat cultivation. Due to lower productivity it ranks third in terms of production. In India, Wheat is sown during October to December and harvested during March to May. The wheatmarketing season in India is assumed to begin from April every year. The major wheat producing states of India are Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, Rajasthan and Bihar. Which together account for around 90% of total production. The total procurement of wheat by Government agencies during last 15 years ranges from 8 to 23 million tons, accounting for 15-30% of the total production. Indian government plays a key role in deciding the domestic market sentiments. Minimum support prices (MSP) and Central Issue Prices (CIP) are the instruments used by government to maintain food buffers for food security and stable prices. The minimum support price (MSP) in 2008-09 was hiked from Rs 1000 to Rs 1080. Wheat procurement for the 2009-10 Rabi marketing season has reached a record 25.29 million tonnes as on third week of May against 22.68 million tonnes procured in the entire 2008-09 marketing season. 2008-09 Wheat demand supply scenario has been comfortable. The 2009-10 Wheat production is estimated to be 77.7 million tones, Consumption to be 72.5 million tones, and ending stocks to be 17 million tones.

MARKET MOVING FACTORS

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Price tends to be lower as harvesting progresses and produce starts coming into the market. At the time of sowing and before harvesting price tends to rise in view of tight supply situation. Weather has profound influence on wheat production mainly in Haryana & Punjab. Temperature plays crucial role towards maturity of wheat and productivity. Change in Minimum Support Price (MSP) by Govt and the stock available with Food Corporation of India (FCI) and the release from official stocks influences the price. Though, international trade is limited, the ups and downs in the production and consumption at all the major/minor producing and consuming nation does influence the long-term price trend.

SPECIALTY OF WHEAT FUTURES CONTRACT AT MCX

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Delivery based contract with main delivery center at Delhi and additional delivery centers at Khanna, Karnal, Kanpur, Kota and Indore Contract size is 10 MTs with tick size of 10 Paise. With one Rupee change in price profit/loss is of Rs. 100 on each contract. Investor friendly: to take benefit of arbitrage opportunity between physical market and future market as well as between future market to future market. Perfectly suited for traders, corporates, millers and farming community to hedge their positions with delivery mechanism..

WEB RESOURCES
www.agricoop.nic.in www.agriwatch.com
www.mcxindia.com

www.imd.ernet.in www.fao.org

www.fas.usda.gov www.futuresource.com

www.agrimarknet.nic.in

For private circulation only.

CONTRACT SPECIFICATIONS OF WHEAT

Contract Horizon Trading Period Trading Session Trading Unit Quotation/Base Value Maximum Order size Tick Size (minimum price movement) Price quotation Daily Price Limits Initial Margin Special Margin Six Months Monday to Saturday Monday to Friday: 10.00 am to 5.00 pm Saturday: 10.00 am to 2.00 pm 10MT 100 Kgs 500 MT 10 paise Wheat (Standard Mill quality) Ex-Warehouse Delhi including all taxes. 3+1% 5% In case of additional volatility, a special margin at such other percentage, as deemed fit, will be imposed immediately on both buy and sale side in respect of all outstanding position, which will remain in force till volatility persists after which the special margin may be relaxed. Client-wise- 6000MT, Member-wise- 30000 MT or 15% of the market-wide Open position, whichever is higher

Maximum Allowable Open Position

MCX is No. 1 in silver, and No. 3 in gold, copper, zinc, crude oil, and natural gas, globally
(based on lots traded as on November 29, 2008)

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10 MT with tolerance limit of 500kgs 25% Exchange Approved warehouse at Delhi ( upto the radius of 50 kms from municipal limits) Additional Delivery Center (s) Exchange approved warhouse at Khanna, Karnal, Kota, Kanpur, Indore Hardoi, Bareilly, Gonda, Benares, Mathura ( upto the radius of 50 kms from municipal limits) Quality specification/ Deliverable grades Wheat of Standard Mill variety confirming to the following quality standards will be deliverable. The material will be tested using a 3 mm sieve and no live infestation is permitted. DEFECTS DEFECTS: (1) Foreign Matter (Organic/Inorganic) 3.0% (Max) (2) Damaged Kernels 4.00% (Max) (other than infestation damaged) (3) Shrunken, Shriveled & Broken Grains 6.00% (Max) (4) Infestation Damaged Kernel 1% (Max) 9% basis Total defects (1 + 2 + 3 + 4) 13% Acceptable upto Rejected if Total defects is Above 13 % 76 kg / hl Basis Test weight Up to 76 kg/hl Acceptable with rebate of 150 grams per kg/hl or pro-rata variance in hector liter weight deducted per quintal weight delivered Below 74 kg/hl Rejected Moisture (determined by Air over Method) 11% Basis Upto 13 %With rebate at 1:1 Acceptable Rejectable Above 13 % Note: Please refer to the exchange circulars for the latest contract specifications and delivery and settlement procedures.

DELIVERY Delivery Unit Delivery Margin Delivery Center(s)

For Customer Support : +91-22-66494040

To get the latest futures price of a commodity, sms MCX <Commodity Name> to 58888

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10/2009