New Delhi, National Commodity and Derivatives Exchange (NCDEX) on Wednesday said it will launch the country’s first exchange-traded weather derivatives contract on May 29, offering businesses and farmers a regulated tool to hedge against monsoon variability.
The contract, called RAINMUMBAI, which has received approval from the Securities and Exchange Board of India (SEBI), was developed with the Indian Institute of Technology Bombay (IIT Bombay), using rainfall data from the India Meteorological Department (IMD).
“India has lived with monsoon uncertainty for centuries. RAINMUMBAI provides every stakeholder with a regulated, scientific tool to manage this uncertainty,” NCDEX Managing Director and Chief Executive Arun Raste said in a statement.
The futures contract tracks the Cumulative Deviation Rainfall (CDR) index, which measures how actual rainfall diverges from the Long Period Average (LPA) during the June-to-September monsoon season. The LPA is benchmarked against a 30-year dataset spanning 1991 to 2020, with daily readings sourced from IMD weather stations at Santacruz and Colaba in Mumbai.
Unlike traditional crop insurance, the contracts are cash-settled purely on observed meteorological data, removing the need for physical loss assessments and enabling faster payouts.
Each contract carries a lot multiplier of Rs 50 per millimetre, with a ticket size of one millimetre and a maximum order size of 50 lots. Trading will run Monday through Friday from 10:00 am local time, with a daily price limit capped at 9 per cent.
NCDEX said the product is aimed at a broad range of weather-sensitive sectors, including agriculture, power utilities, infrastructure, banks holding agricultural loan portfolios and logistics operators.
Bikram Singh, head of IMD’s Regional Meteorological Centre in Mumbai, said standardised long-term weather data was critical to making such financial instruments credible.
“It is science meeting finance in a regulated marketplace,” he said.
NCDEX is India’s leading agricultural commodity exchange, operating under SEBI oversight.
