MCX Unveils Futures Trading In Two More Cotton Varieties

Mumbai, July 29 | Updated: Jul 31 2004, 05:18am hrs
Multi Commodity Exchange of India (MCX) has launched trading in futures of two more cotton varieties in Mumbai on Thursday. These cotton future trading will be in the medium staple and long staple cotton future.

In fact, MCX had already launched unginned cotton (Kapas) on January 22, 2004, however, Kapas received a lukewarm response. MCX deputy MD, Joseph Massey, said: We feel that lack of liquidity and price advantage available to the industry in buying in cash market or through forward contracts on bilateral basis are inducing them to continue in this spot market rather than use the futures market. Hence, an active cotton contract would bring both the producers and the consumers to the exchanges due to its efficient pricing.

Mr Massey said: It is expected that during the current cotton season, it will have reasonable liquidity in both unginned cotton and staple-based cotton contracts.

Following erratic rainfalls and high price volatility, the futures trading in cotton has become very critical. However, currently cotton prices are witnessing a downtrend on the New York Board of Trade due to over supply and are expected to dip further in the coming weeks.