Trading in the newly launched, more representative Cotton Futures Contract commenced on 13th February 2023 with the collaborative approach of the Government of India, Multi-Commodity Exchange (MCX), trade and industry.
Now, the prices are to be in candy rather than bales.
Rishi Nathani, Chief Business Officer, MCX, announced the re-launch of cotton futures on the platform.
In August 2022, the Securities and Exchange Board of India (SEBI) suspended cotton futures on MCX.
It is worth mentioning here that in order to make the futures’ prices more representative and not speculative, contract specification and quality standards have been modified and a new cotton future contract has been launched at MCX on 31st January 2023.
Also Read: Cotton futures trading on MCX expected to resume soon
It will help in real price discovery and will also provide a platform for the industry to hedge its risk from future adverse price volatility.
Further, farmers would also benefit and will have reference prices while taking a decision to sell their produce in the market.
During cotton season 2021-22, Indian cotton prices reached a peak level of more than Rs. one lakh per candy in the month of May 2022 following unseasonal rain, speculative trading and a global cotton shortage.
The industry was raising concerns of lesser open interest and speculation through trading of cotton futures contracts on the MCX and thereby distortion in domestic cotton prices.
