Hubli (Karnataka), October 15, 2015: In view of the hedging needs and requirements of the cotton stakeholders in and around Hubli, Multi Commodity Exchange of India Ltd (MCX) along with Karnataka Cotton Association organized an awareness programme in Hubli (Karnataka) on October 14, 2015. The programme mainly focused on educating the market participants about the need to manage price risks and volatility associated with cotton prices.
During the programme, the market participants were briefed about the MCX cotton contract, which has been well accepted by the entire cotton value chain players. The interactive session further focused on fundamentals of commodity trading, introduction to cotton futures, benefits and importance of hedging. The market participants were also explained about the technicalities of working of the commodity markets with respect to price discovery, transparency and risk management mechanism in trading and settlement of transactions.
Besides they learned about the healthy correlation between the international benchmark cotton prices of the Inter-Continental Exchange at USA and MCX cotton prices, which proves the efficiency of MCX to not just discover the local cotton prices but also in providing an efficient hedging platform to the cotton exporters and importers.
Mr. NK Muthappa, Assistant Vice President-Business Development, MCX said, “The cotton contract traded on MCX has been consistently witnessing increased participation from its stakeholders, since it meets the needs of the whole cotton value chain including farmers, ginners, traders, spinners and textile manufacturers. Between 2012 and 2014, the average daily volume of the cotton contract traded on MCX has increased significantly, while the average daily open interest has grown considerably; thereby, proving high hedging interest in this contract.”
“Further, MCX cotton is a compulsory delivery contract with provision to deliver at Rajkot, Kadi (Gujarat), Yavatmal, Jalna, Jalgaon (Maharashtra), Bhatinda (Punjab), Sirsa (Haryana), Beawar (Rajasthan), Guntur (Andhra Pradesh) and Raichur (Karnataka)”, he stated.
Mr. Shantilal Ostawal, Secretary, Karnataka Cotton Association said, “Never was the need so intense among cotton value chain stakeholders in the past for a successful derivatives market. Futures trading in cotton will go a long way by effectively providing a benchmark price for cotton in India, and also helping the diverse cotton trade and industry functionaries in managing price risks on their spot and forward transactions in domestic as well as export markets.”