The National Commodity and Derivative Exchange Ltd (NCDEX), a leading agriculture commodity exchange, has decided to launch futures contract in the Shankar Kapas variety of cotton on November 29, 2007.
Shankar Kapas is the benchmark cotton variety grown in the country, being the largest variety grown, consumed and exported.?Our existing Kapas contract has been well received by the trade. We took a cue from this and jointly explored the feasibility of introducing futures contract in Shankar Kapas with value chain participants. The trade has given us a positive feedback on this initiative. With the cotton season in full swing we thought this is the appropriate time to roll out the new contract,? said Shirkant Subbarayan, chief business officer, NCDEX, in a release.
An across-the-board demand from value chain participants – growers, processors, exporters, and traders – has encouraged the exchange to plan introduction of futures contract in this cotton variety.
?We need a hedging platform for the Shankar forward sales,? said Dilipbhai Patel, president of The All Gujarat Ginner?s Association.
Shankar Kapas recorded a total production of over 90 lakh bales in the 2006-07 crop seasons. This year the production estimates for this variety is about 115 lakh bales valued at around Rs 11, 000 crore.
The new contract will be based on the same model as the existing V797 contract but with Shankar cotton as the underlying. ?The new Shankar futures contract has been customised as per the requirements of the value chain participants,? said Subbarayan.