NCDEX launches futures on Chennai rains

The Chennai-based rain contract will enable participants to manage rainfall-linked risk through a transparent, standardised, and cash-settled futures contract.

NCDEX, a leading commodity exchange, has launched an exchange-traded weather derivatives futures contract on Chennai-based rainfall.

RAINCHNNAI contracts are designed to help market participants hedge financial exposure arising from the North-East monsoon, which accounts for nearly 70 per cent of Chennai’s annual rainfall.

The Chennai-based rain contract will enable participants to manage rainfall-linked risk through a transparent, standardised, and cash-settled futures contract.

Cumulative model

Earlier, the exchange launched RAINMUMBAI, the first-ever exchange-traded weather derivatives contract developed in collaboration with IIT Bombay and anchored in official data from the India Meteorological Department. Together, RAINMUMBAI and RAINCHNNAI extend rainfall risk management across India’s monsoon cycle, from the Southwest Monsoon (June-September) to the Northeast Monsoon (September-December).

Kedar Deshpande, Chief Business Officer, NCDEX, said the Chennai-based rain contract takes that framework to the retreating North-East Monsoon, which primarily impacts southern India, bringing nearly 70 per cent of Chennai’s annual rainfall in just four months.

The contract uses a scientifically structured Cumulative Deviation Rainfall model that tracks how actual rainfall at Chennai’s Meenambakkam and Nungambakkam stations differs from the Long Period Average, based on decades of IMD data, he said.

Both the Mumbai and Chennai rain contracts complete a monsoon risk management cycle that runs from June through December, covering both of India’s major monsoon systems, he added.

The RAINMUMBAI contract will be based on LPA determined from the past 50 years and the actual rainfall. Unlike traditional insurance products, these weather derivatives are settled purely on observed data, eliminating the need for loss assessment. This enables faster settlement cycles and greater operational efficiency for participants, said the exchange.

Published on August 31, 2026