Japan rice futures working as benchmark -exchange

TOKYO, Sept 20 (Reuters) - A month after listing on the Tokyo Grain Exchange, rice futures are offering a benchmark price and serving a key purpose of their launch, although trading volume remains sluggish due to caution among investors, the exchange said on Tuesday.

Tokyo Grain Exchange President Yoshiaki Watanabe told reporters he was "very disappointed" by the low trading volume, but said time was needed to see full-fledged activity.

"Volume should pick up step by step. The environment for increased volumes will be completed when all six contracts are listed on Oct. 20, when the first delivery takes place on Nov. 20 and when planting for next year's crop begins in April-May," Watanabe said.

The fifth contract, for March delivery, will be listed on the exchange on Wednesday.

Watanabe said a market focus on safe-haven gold was also one reason luring investors away from the new product.

The average daily trading volume was about 900 lots in September, far below the 5,000 lots the exchange wants eventually.

"Market prices are within everybody's expectation as the gap between physical and futures prices has narrowed. Our exchange is offering an appropriate price level" as a benchmark for investors, he said.

The most active February contract <0#JRE:> traded at 14,200 yen ($186) per 60 kg on Tuesday, while the new crop for Ibaraki Koshihikari brand, one of the key brands deliverable, traded at 14,100 yen in mid-September.

The Tokyo Grain Exchange and Kansai Commodities Exchange listed rice futures on Aug. 8, reviving them for the first time since 1939, when the state took control of rice distribution. ($1 = 76.405 Japanese Yen) (Reporting by Chikako Mogi; Editing by Michael Watson)