* Considers adding agricultural contracts, studying pepper
* CEO says talking to trade about where value can be added
* Tea Centre triples trade in H1 2014 vs Hi 2013
By Maha El Dahan
DUBAI, July 7 (Reuters) - The Dubai Multi Commodities Centre (DMCC) said it would delay launch of a spot gold contract to the third quarter to ensure that the technical aspects run smoothly and was studying possible contracts for several agricultural commodities.
The Dubai Gold and Commodities Exchange (DGCX), which already trades gold futures, said in April it would launch the spot contract in June, but the chief executive of DMCC, which hosts the exchange, said on Monday a decision was taken to delay the launch.
“There’s been some delay in the technology in terms of getting all the participants linked,” Gautam Sashittal told Reuters.
“We don’t want to launch a great contract that technology can’t handle and participants can’t actively participate in, so we took a conscious decision to delay the launch,” he added.
The contract will cover 1 kg (32 troy ounces) of 0.995 purity gold.
“It’s important because most of the gold that passes through Dubai is for physical trade. It will end up going to India to be manufactured into jewellery, so it’s important to have a spot contract,” Sashittal said.
About 40 percent of physical gold traded in 2013, worth about $75 billion, passed through Dubai, up from $70 billion in 2012.
Sashittal also said Dubai was looking into the possible launch of contracts in several agricultural commodities in the near future, including the possibility of one for black pepper.
“It is something we are researching, but it could take time as we need to know the scope and the size of the market,” he said.
The DMCC has met with traders in various commodities including sugar and pulses in an effort to determine where value can be added.
Sashittal ruled out rice as one of the options, saying that it was already a well established re-export business in Dubai, while the DMCC was looking to create opportunities in agricultural commodities that are not as firmly established, such as it did in 2005 with the launch of its tea centre.
“What we don’t do is we don’t compete with the trade, so we talk to the traders, and if they say we need common storage facilities or milling facilities, then we look at feasibility and create infrastructure. But if the traders are already well serviced for that particular commodity, then we don’t duplicate that,” he said.
The DMCC’s Tea Centre, which started trading activities in 2005, tripled trade volumes to 20 million kg of tea in the first half of 2014 from 7.5 million kg in the first half of 2013.
Dubai now imports tea from around 13 different origins, and around 60 percent of the world’s tea re-exports go through the emirate.
The facilities provided by DMCC, which include warehousing and blending, give traders the flexibility to blend various origins together and create new labels for export, Sashittal said. (editing by Jane Baird)