Agri Business

Cotton delivery in MCX hits all-time high

Our Bureau Mumbai | Updated on March 06, 2019

Cotton deposited in Multi Commodity Exchange accredited warehouse soared to all-time high of 1.81 lakh bales and surged by 56 per cent on Tuesday compared to 1.16 lakh bales logged in the same period last year.

The cotton contract continue to attract increased traction from ginners, traders, farmers and corporates among other stakeholders.

Besides, cotton futures contract recorded second highest intra-day volume of 3.70 lb valued at about ₹764 crore on February 22 with an open interest of 4.30 lb.

With an internationally accepted technical specifications, MCX’s cotton contract caters to over 75 per cent of cotton grown in the country. So far, about 9.77 lb of cotton has been delivered on the exchange platform.

BS Rajpal, Vice President, Cotton Association of India and Director, Manjeet Cotton said the exchange’s cotton futures has been servicing the price risk management needs of market participants such as producers, ginners, millers, yarn manufacturers and exporters, besides facilitating transparent price discovery, he added.

Mrugank Paranjape, Managing Director, MCX said the record deposit of cotton stocks in MCX accredited warehouses is a testament to increasing liquidity and depth in the contract. It demonstrates the contract’s ability to enable cotton stakeholders to effectively manage their price risk, he added.

Narendra Ahlawat, Managing Director, MCX Clearing Corporation said the platform is not only providing efficient risk management tools to the stakeholders, but is also facilitating a robust system for participants to tender and receive delivery.

For next cotton crop season output is estimated to fall to a nine-year low of 330 lb against 365 lb produced in crop year ended September, 2018, according to Cotton Association of India.

Given the annual Indian market size of cotton textiles at about ₹60,000 crore and an annualised volatility of 16.5 per cent in cotton prices last year, the industry is exposed to a price risk of over ₹9,900 crore.

Published on March 06, 2019

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