New Delhi : With a collaborative approach of the Central Government, MCX, trade and industry, trading has commenced in the newly launched more representative Cotton futures contract from February 13, 2023.
To make the futures prices more representative and not speculative, the contract specifications and quality parameters have been revised and a new cotton futures contract has been launched in MCX on 31st January 2023.
This will help in genuine price discovery and also provide a platform for the industry to hedge their risk from adverse price volatility in future. Apart from this, farmers will also benefit and will have a reference price while deciding to sell their produce in the market.
During the cotton season 2021-22, Indian cotton prices reached their all-time high of over Rs. 100,000 per candy in the month of May 2022 after unseasonal rains, speculative trading and global cotton shortage.
The industry was raising concerns of low open interest and speculation through trading of cotton futures contracts on the Multi-Commodity Exchange (MCX) thus distorting domestic cotton prices.
The matter was raised during the second interactive meeting of the Textile Advisory Group (TAG) held on 14th July 2022, which resulted in reconstitution of the Product Advisory Committee of MCX and its expansion with representation across the textile value chain from farmer to end users (i.e. spinning mills) to make the system more structured according to the domestic market to prevent speculative trading and volatility in cotton prices. Now, Indian cotton prices are competitive and in line with global prices.
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