Cotton Futures – Helping Manage Risk

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Rayagada (Odisha), November 06, 2015: Aimed at enhancing the hedgers’ participation in the commodity derivatives market, and particularly educating the cotton stakeholders about the many benefits of cotton derivatives, Multi Commodity Exchange (MCX) and Cotton Corporation of India (Rayagada) jointly organized an awareness programme in Rayagada on Friday, November 06, 2015.
Members present on the dais, Mr. T K Das, Branch Manager- Cotton Corporation of India Ltd. Rayagada, Mr. Madhav Rao Kumadal- Working President. Merchant Chamber Of Commerce, Rayagada, Mr. Amarnath Kintali- President. Jewellery Association, Rayagada spoke elaborately on the benefits of commodity futures market in India. They jointly opined that exchange-traded commodity futures contracts in India have led to efficient price risk management.
The experts during the programme made detailed presentations on fundamentals of commodity trading, introduction to cotton futures, benefits and importance of hedging. The participants were briefed about the cotton futures contract offered by MCX in the 29mm variety cotton, the specifications of which are aligned with the requirements of the physical market participants, in terms of staple length, micronaire and tensile strength.
In a separate session, the market participants were explained about the technicalities of working of the commodity exchanges with respect to price discovery, transparency and risk management mechanism in trading and settlement of transactions.
Mr. Vibhor Tandon, Assistant Vice President-Business Development, MCX said, “Cotton futures contract offered by MCX has been playing an important and beneficial role in the entire cotton ecosystem from farmers to ginners to textile mills by providing an effective platform for risk management and price discovery.”

“Moreover, MCX futures contracts have ensured stable and fair prices for the small and medium enterprises. Fairer prices reduce the cost of production, boost growth of the SMEs and provide more accurate demand-supply signals that reduce overall risks in these businesses”, he added.

Mr. T K Das, Branch Manager- Cotton Corporation of India Ltd. (Rayagada) said, “Price risk management tools offered by commodity exchanges such as MCX, ensures stability to the cotton industry by safeguarding cotton stakeholders against volatility and uncertainty. The exchange-traded derivatives market in cotton continues to provide a lot of benefits to its stakeholders, and has the potential to bring in significant changes in India’s cotton economy.”

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