Through IME, We Will Take Some Beating in Global Saffron Market

Tuesday, 29 May 2018

According to the report by the IME’s International Affairs and PR, the ceremony of launching Saffron futures in the IME was held at the presence of Ali Akbar Mehrfard; Deputy Minister of Agriculture Jihad, Mohammad Reza Pour Ebrahimi; Chairman of Iranian Parliament Economic Commission, Shapour Mohammadi; the chairman of SEO, Hossein Shirzad; Head of the Central Rural Cooperative Organization and a group of managers of the agriculture sector and the capital market of Iran.

At the beginning of the ceremony, Shapour Mohammadi, chairman of the Securities and Exchange Organization, said: “Today, we are witnessing the beginning of trading saffron futures in the Iran Mercantile Exchange. It is worth noting that the Deputy Minister of Agricultural Jihad has made many efforts in trading wheat and saffron through IME and we hope to see a continuous supply of this product on the IME.

He added: IME is unique in the world in terms of variety of products and the presence of saffron as a valuable and strategic product in this exchange is necessary.

Mohammadi referred to the experience of using future contracts in other countries of the world, adding that the use of futures contracts in agricultural products has a long history, so that future contracts, being traded in most countries of the world, are covering high price fluctuations and price volatility.

He noted that while problems such as the lack of transparent information flow, the widespread presence of intermediaries in an unfair manner and the existence of a forward transactions phenomenon in the negative sense in developing countries, has led to the emergence of future markets and systematic mechanisms especially through exchanges because commodity exchanges can cover price fluctuations and severe risks.

Mohammadi referred to the benefits of using future contracts and said: “Price risk management, facilitating price discovery processes, increasing transparency, helping to market development, facilitating physical transactions, and increasing market transparency are advantages of these contracts.”

He noted that in most countries active in agricultural sector, there is an agricultural exchange trading futures contracts, for example, in India, future contracts on cardamom and mint, in China, future contracts on soybean and maize, in Brazil, future contracts on livestock and Arabic coffee and in Malaysia, future contracts on palm oil are being traded.

According to the chairman of SEO, if future contracts are traded in the agricultural sector, it will have numerous effects, including price regulation, export facilitation, national interests safeguarding and farmers’ access to true value of their products, which also applies to saffron. Because the difference between retail prices of saffron discovered at IME and its global prices declares that there is plenty of opportunities to take advantage of.

He noted that in Dalian Commodity Exchange, launching future contracts has led to an increase in the liquidity of agricultural products and in National Commodity and Derivatives Exchange of India it has been applied as a risk management tool.

The chairman of the SEO saying that saffron is one of the most important agricultural products and is highly valued, stated: ” The required conditions for the success of future contracts for saffron are provided in IME, so that by launching the saffron future contract, Iran, as the largest producer and exporter of saffron in the world, will be the price reference in international markets and a strong cash market for this product.