Government approves weather futures, contracts to start trading on exchanges soon Who will benefit from government's decision?

The government has approved weather futures. Along with this, 113 more futures have been included in the approved list but the question is who will benefit from the weather futures and how much. Now when will its futures be traded in the exchange? NCDEX has tied up with Skymet. 104 futures have been approved in the new list.

The government has also approved bio fuel, cement, eggs, freight, electricity futures. Polymers have also found a place in the 'Approval List'. NCDEX MD and CEO Arun Raste said, “The slight technicality is that this government notification has come on the recommendation of SEBI. After this there will be a circular from SEBI after which we will start our work.”

When will trading start?

Arun Raste said that while there is currently a big debate over the minimum support price, two things will come to the fore when futures start. If all products are linked to a market, the market for them is above the MSP, no one will look at the MSP. Secondly, milk powder has also been approved. India is the largest milk producing country in the world and this will be a great opportunity for dairy farmers. Raste said that after official approval from SEBI, it will start trading on the exchanges. Arun Raste said that the weather will be beneficial for future farmers.

What are weather futures?

Weather futures are a type of financial instrument widely used to hedge against or compensate for losses caused by weather. Weather futures are used as financial instruments where there is weather related risk.

The seller of weather futures is willing to bear the loss due to weather in exchange for a premium. If there is no loss due to weather before the contract expires, the seller of the futures will make a profit. On the contrary, the contract buyer will benefit if there is any damage due to weather during the contract period. In simple terms it works like weather futures insurance.