Dubai's commodities exchange will launch a pulses futures contract in the first three months of 2008, industry sources said on Monday.

The bourse hopes it will benefit from strong demand from the Arab world and proximity to India, the world's largest consumer of pulses.

"The exchange will go ahead in the first quarter of next year...they are in the process of finalising the specifics of the contract," an industry source said.

The Dubai Gold and Commodities Exchange (DGCX) chairman Colin Griffith said last month the pulses contract may either be introduced by the end of 2007 or early next year.

 The pulses futures contract could include various food crops and may allow for physical delivery, the Dubai Multi Commodities Centre (DMCC), DGCX's controlling shareholder, said last month.

The exchange was considering a contract size of 10 tonnes, which could include yellow peas, chickpeas, pigeon peas, black matpe beans and red lentils.

The contract would mostly be settled on paper, but could allow physical delivery to warehouses at international ports.

Dubai, the Gulf trade and tourism hub, launched the region's first futures exchange in 2005 as the economies of the Gulf Arab nations boomed on windfall oil income.

The DGCX aims to launch a steel contract on October 29. Once that contract is launched, it will focus on the pulses contract, one source inside the bourse said.

The DGCX is seeking to become a major commodities centre. It has also launched silver and currency futures contracts. It plans to introduce silver options and futures contracts for cotton and freight rates.  -Reuters