The National Commodity & Derivatives Exchange (NCDEX), in collaboration with the India Meteorological Department (IMD) and the Indian Institute of Technology Bombay, has initiated a pilot futures contract linked to Mumbai’s monsoon rainfall.
On Wednesday, the exchange launched RAINMUMBAI, a rainfall index designed to track deviations from the city’s 30-year long-period average (LPA) rainfall. Starting May 29, traders will have access to four monthly futures contracts that allow them to bet on the likelihood of excess or deficient rainfall during the monsoon season.
The index will be introduced with a baseline value of 2,206 points, established from historical rainfall data. If rainfall exceeds the long-period average, the index will increase, while a deficit will result in a decrease.
“Like all derivative contracts, RAINMUMBAI is open for trade to any market participant,” stated Kedar Deshpande, Chief Business Officer at NCDEX. “Monsoon typically begins in Mumbai and then extends to central and western India. Farmers can utilize RAINMUMBAI as a reference to mitigate financial risks associated with unpredictable rainfall. Any farmer across India can employ this tool to establish a hedge position based on correlation.”
This initiative marks a global first for derivatives contracts based on monsoon rainfall; other exchanges, such as the Chicago Mercantile Exchange (CME Group), offer contracts based on standardized temperature and snowfall data for various cities.
Specifications
Each RAINMUMBAI contract will have a lot size linked to ₹50 per millimeter of rainfall, resulting in an approximate initial contract value of ₹1.10 lakh. With margins set between 10-12 percent, traders will need to secure around ₹12,000 per lot. The contracts will be cash settled upon expiry.
To support liquidity in the early stages of trading, NCDEX plans to introduce a liquidity enhancement scheme.
This product is projected to be beneficial for a diverse range of investors, including power utilities, banks with agricultural loan portfolios, and taxi aggregators as part of robust risk management strategies.
Arun Raste, MD & CEO of NCDEX, mentioned that the exchange is also exploring the easterly monsoon and plans to launch additional heat-related products to expand its weather derivative offerings.
RAINCHENNAI Coming Soon
Another product, RAINCHENNAI, will address the easterly monsoon and will utilize daily rainfall data supplied by IMD.
Unlike traditional insurance products, the weather derivatives will be settled based entirely on actual observed data, which streamlines the loss assessment process and promotes a quicker settlement cycle, enhancing operational efficiency.
Bikram Singh, the head of the regional meteorological center in Mumbai, remarked that RAINMUMBAI creates a comprehensive ecosystem for participants across weather-sensitive sectors, including agriculture, energy, financial institutions, and transportation.
The reliability and standardization of weather data are crucial for the success of this financial product, with long-term datasets from IMD providing a trustworthy and transparent rainfall index.
Naveen Mathur, Director of Commodities, Currencies, and International Business at Anand Rathi, noted that while farmers in rural areas may not be directly affected by rainfall in Mumbai, the contract can serve as a hedge due to their reliance on rainfall for their business operations. Similarly, cab aggregators in Mumbai can employ this contract to safeguard their revenue by taking positions in futures contracts to capitalize on their predictions.
Moreover, logistics and shipping companies can utilize this contract as a form of insurance, enabling them to protect their business without incurring losses during adverse weather conditions.
Published on May 20, 2026
