Commodities Tradenet Limited and the Lagos State Government through the Lagos Rice Company (LASRICO), otherwise known as the Imota Rice Mill, are currently inviting applications from shrewd investors for a rice forward contract series 1. Application for the private placement offer opened on June 13 and will close on June 26, 2023.
A forward contract, according to Investopedia, “is a customisable derivative contract between two parties to buy or sell an asset at a specified price on a future date” adding that it could be tailored to a specific commodity, amount, and delivery date.
Going by the offer document, Eko Rice, which is the underlying asset of the forward contract, “is a high-grade premium well-cleaned farrow 52 long grain rice with less than 2% impurity level and 14% moisture content respectively.”
The rice forward contract derives its viability on Lagos State, which currently has a population of about 20 million inhabitants, and consumes a million tons of rice annually, representing 20 percent of Nigeria’s 5 million tons annual consumption.
The rice will be processed at the ultra-modern Imota Rice Mill which was commissioned in January 2023. The Imota Rice Mill was constructed by Buhler, a globally recognised Swiss-German brand known for manufacturing technologies required for processing valuable raw materials (Paddy Rice) into high-end grade finished products.
The forward contract transactions will be conducted through the Lagos Commodities and Futures Exchange (LCFE) to derive quality management, transaction efficiency, and transparency.
The subscription price per unit is N33,000 with a maturity of 60 days. The transaction will be listed on the Lagos Commodities and Futures Exchange, which is a commodities exchange established to trade agricultural commodities, currencies, oil and gas and solid mineral commodities.
Futureview Financial Services and Futureview Securities Limited are the joint lead transaction advisers and dealers while GTI acts as the lead transaction adviser. Other investment outfits that are parties to the offer include the United Capital, Dominion Trust, PAC Capital and Kairos Capital.
Currently, there are 13 agro-commodities that can be traded on the LCFE, and these are paddy rice, cocoa, cashew, dry ginger, palm kernel and cassava. Others are soya beans, yellow maize, whole ginger, wheat, sorghum, sesame seed and shea butter. LCFE also trades gold on its platform.
