The Hindu Business Line : Futures trading in cocoons, raw silk launched

MR Shankarsinh Vaghela, Minister of Textiles, on Thursday launched futures trading in cocoon and raw silk at the National Commodity and Derivatives Exchange in Mumbai. The futures contracts on mulberry cocoon and raw silk was jointly designed by the Central Silk Board and NCDEX.

Mr Vaghela said that sericulture industry would benefit by futures trading through better price discovery, quality linked pricing and the dissemination of market information.

For raw silk, the price limit will be set at 12 per cent, and members can keep positions of 75 tonnes and clients 15 tonnes.

The delivery centre is at Bangalore and at Kancheepuram (Tamil Nadu), Dharmavaram (Andhra Pradesh) and Varanasi (Uttar Pradesh). Quantity specifications are basis grade and fineness and delivery units are 60 kg.

For mulberry cocoons, delivery centres are at Ramanagaram (Karnataka) and Shiddlaghatta.

Units can be traded in lots of 50 kg each and members can hold positions of 500 tonnes and clients 100 tonnes.

According to Mr P.H. Ravikumar, MD and CEO, NCDEX, globalisation and the implementation of WTO agreements in the textile sector would make Indian processors and farmers vulnerable to the volatility in raw material process and hence the Government and NCDEX had adopted the policy of encouraging future contracts of silk.

The Government has been monitoring price volatility in the mulberry silk trade since 2001 and it was felt that price stabilising mechanisms were needed in the domestic silk market.

Futures trading in mulberry cocoons will mitigate the risk associated with the changing process through an efficient price discovery system.

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