The National Commodity & Derivatives Exchange on Monday launched lint cotton futures contract in the 29 mm grade on a direct delivery system to cater to the growing demand from ginners, spinners and exporters. The contract is aimed at addressing risk management of the cotton value-chain participants, the exchange said.
Under the direct delivery system of the exchange, the seller will deliver the cotton bale variety to buyer in a lot size of 100 bales each, either in Rajkot or in Kadi. It’s a mandatory delivery contract with the seller having a window starting from fifth of the expiry month to deliver the fibre and the entire settlement cycle would be completed within eight days from the day of tendering the delivery, the exchange said. Currently, the exchange offers trading facilities in seed cotton futures contract.
“The direct delivery model is aimed at ensuring smooth transfer of goods from the seller to the buyer and with greater effectiveness,” NCDEX chief business officer Vijay Kumar said. The buyer would be mandated to specify a delivery warehouse, which has to be within 100 km of the municipal limits of the centre where the seller has given delivery.