PMEX set to launch first-ever deliverable contract in agriculture products

Pakistan Mercantile Exchange (PMEX) - the country’s only one electronic platform to trade futures commodities - announced on Wednesday to officially launch its first-ever ‘deliverable’ contract in agriculture products i.e. sugar over the next two weeks.

The exchange will offer buyers and sellers to discover the sweetener price, improve supply chain management, and discourage hoarding and speculations of the commodity in the country.

“PMEX is aimed at formally launching Deliverable Sugar Futures in 10 to 15 days,” PMEX Chief Business Officer (CBO) Zaki Ur Rehman said while talking to Business Recorder.

This would be a 30-day deliverable futures contract of 12 metric ton each, he said.

The Securities and Exchange Commission of Pakistan (SECP) recently approved the launch of the contract (deliverable sugar futures). The futures exchange (PMEX) considered it as a landmark step towards improving transparency and efficiency in Pakistan’s sugar trade.

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The exchange is onboarding buyers and sellers these days, as there are around 80 sugar mills nationwide. The potential buyers could be anyone including confectionery and soft drink makers in the corporate sector.

Rehman said this would be the PMEX’s first ever deliverable futures contract in agriculture products.

Earlier in 2023, PMEX offered trade in rice and maize along with an option to take physical delivery of the grain as well.

“However, such trade and delivery option were offered in association with EWR [Electronic Warehouse Receipts] operators in the country like Naymat Collateral Company Management,” he said.

A press statement from the PMEX said sugar remained a major product in the agriculture sector.

“Unfortunately, it faced longstanding challenges including unregulated pricing, excessive speculation, hoarding, and supply chain inefficiencies. With the commencement of trading in Deliverable Sugar Futures at PMEX, the industry will gain access to a regulated, national platform that enables transparent price discovery, streamlined trading, effective risk management, and enhanced market documentation,” it read.

The presser said, PMEX conducted roadshows in multiple cities including Sargodha and Lahore, the largest sugar trading hubs in Pakistan, bringing together sugar millers, brokers, traders, dealers, and large sugar buyers.

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The sessions offered the participants detailed orientation to the new contract specifications, live trading demonstrations, overview of the account opening process and training on how to conduct mock trading on the PMEX before the contract launch, according to the statement.

Speaking on the occasion, PMEX CEO Khurram Zafar there was a lack of structure and transparency despite sugar being one of the country’s most traded commodities.

“With Sugar Futures, PMEX is turning the tide—ushering in transparency, price stability, and a future where fair trade leads the way,” he said.