MUMBAI, 17 August 2023: National Commodity and Derivatives Exchange Ltd. (NCDEX), India's premier Commodity Exchange, has entered into a strategic collaboration with Skymet Weather Services, a renowned authority in weather analytics.
The objective of this partnership is to deepen the comprehension of the profound influence of weather on agricultural commodities, thus mitigating price risks for participants in the market. The collaboration addresses the increasingly critical issue of climate change and its far-reaching implications on agricultural production and pricing volatility.
The signing of a Memorandum of Understanding (MoU) between NCDEX and Skymet Weather Services signifies a significant stride towards a scientific understanding of the link between farmers and weather patterns.
Arun Raste, MD & CEO of NCDEX, highlighted the empowerment of farmers through this alliance, aiming to equip them with insights into changing weather dynamics. The collaboration endeavors to educate market participants about the interconnectedness of weather patterns and agricultural commodities. The objective is to enable stakeholders to make informed decisions, manage risks effectively, and contribute to the overall stability of the agriculture industry.
Skymet Weather Services has been actively engaged in assisting the agricultural ecosystem in comprehending weather dynamics. The pronounced impact of weather on production and yield has drawn increasing attention in recent years. Weather intricacies affect the quality, output, and earnings of primary producers, underscoring the need for awareness campaigns on commodity derivative hedging.
Jatin Singh, MD & Founder of Skymet Weather Services, highlighted the urgency of tools such as weather derivatives to manage the impact of weather risk in the agricultural sector. He emphasized the demand for tradable weather indices that could provide effective hedging mechanisms for farmers, processors, exporters, and other stakeholders. The collaboration between NCDEX and Skymet Weather Services is a significant step towards introducing such tools to the market.
NCDEX had previously introduced two national-level rainfall-based indices, the Indian Monsoon Index and Indian Rain Index, in collaboration with Skymet Weather Services. These indices track the movement of rainfall across the country, reflecting the systematic shifts in precipitation patterns. While these indices currently serve as representative measures of rainfall and are not available for trading, they illustrate NCDEX's commitment to raising awareness about factors influencing India's economy and agriculture.
The collaboration between NCDEX and Skymet Weather Services holds the promise of enhancing knowledge, fostering effective risk management, and contributing to the sustainable development of India's agricultural sector. It underscores the critical role that data-driven insights play in addressing the challenges posed by climate change in the realm of agriculture.
