Pistachio Futures Market Opens in Iran

EghtesadOnline: The market for futures contract for pistachio was officially launched at the Iran Mercantile Exchange on Sunday.

News ID: ۷۴۸۷۱۳

14 October 2019

The initiative is said to be the first derivative market for trading pistachio in the world, according to the IME chief Hamed Soltaninejad.

Soltaninejad expressed the hope that the market would be a reference for pricing the nuts for world markets, according to Financial Tribune.

“The reason as to why there is no similar market for pistachio and saffron in the world is because these are mainly farmed in Iran,” he told attendees in the opening ceremony, the IME website reported.

The IME head pointed to 125 trillion rials ($1 billion) worth of agricultural products traded within futures contract since the beginning of the current fiscal year (March 20), underscoring  plans to tap modern financial instruments to achieve fair pricing, finance the agro sector and hedge risks emanating from price fluctuations.

According to Iran Pistachio Association, Iran and the US account for 85% of the global production of this nut (dry in-shell).

The two countries have switched places as the world’s biggest pistachio producer over the years. However, statistics show Iran has been lagging behind its rival in the last two years.

Apart from pistachio, IME also hosts trade in future contracts for saffron and cumin.

Futures are derivative financial contracts that oblige parties to transact an asset at a predetermined future date and price. The buyer must purchase or the seller must sell the underlying asset at the set price, regardless of the market price on expiry date.

Elaborating on the pistachio contracts, Soltaninejad said round pistachios with the standard size of 30-32 will be traded in the bourse.

One hundred kilogram of pistachios will be traded within each contract and the first such contracts are slated to mature in the ninth calendar month (Nov.22-Dec.21).

Buyers can place orders for maximum 25 contracts and the daily price spread is set at ±5% of settlement prices a day earlier.

Win-Win Situation

As another speaker at the ceremony, Shapour Mohammadi, the head of Securities and

Exchange Organization, underscored the merits of commodity bourse in helping both farmers and exporters.

“This creates a win-win situation in which exporters can procure the goods they want for export and farmers can find buyers”.

Pointing to the price-discovery function of the market,   Mohammadi complained that despite the fact that Iran has the upper hand in producing and offering the key crop, pistachio prices are determined in other countries.

“For sure, the IME can help ensure that the work of farmers are fairly priced,” he said.

It is often reported that farmers in general, including saffron and pistachio growers, benefit the least from what they toil for with hard and tedious work. Middlemen and avaricious dealers always benefit the most taking away what belongs to others.

Iran’s prized pistachio is exported to Germany, Afghanistan, the UAE, Bahrain, Jordan, Canada, China, the Czech Republic, India, Iraq, Kuwait, Kyrgyzstan and Kazakhstan, among others.

The southeastern Kerman Province is the pistachio production hub.