MCX, Gunj Merchants' Association organise seminar on cotton futures in Raichur

KOLKATA: Multi Commodity Exchange and Gunj Merchants' Association on January 22 organised a seminar on cotton futures in Raichur to educate investors about the need to manage price risks and volatility associated with cotton prices.

The seminar dwelt on the MCX cotton contract, which has been well accepted by the entire cotton value chain players. The interactive session focused on the fundamentals of commodity trading, introduction to cotton futures, and benefits and importance of hedging. It also discussed price risk management and commodity futures market, which provides some other benefits such as price discovery, market information access and quality consciousness.

"The availability of an efficient rupee-denominated futures market in cotton within India as well as its dissemination is enabling participants across the value chain to have knowledge of the right pan-India price, as well as to hedge effectively," said NK Muthappa, assistant vice president-business development at MCX

He said, "The healthy open interest in the MCX contract and seamless delivery at multiple delivery centres also enable efficient hedging to all value chain participants – farmers, ginners, traders, millers and exporters."

Muthappa said that although the base grade of the MCX cotton contract is 29 mm, its deliverable range is 27 mm to 31 mm, which covers about 75% of India's cotton produce. These advantages of the MCX cotton contract make it highly attractive to stakeholders of India’s cotton economy, he said.

Bellam Narsa Reddy, president of Gunj Merchants' Association said, "A crucial institution in the ecosystem of cotton is the futures market of this commodity, which has been playing a great beneficial role in the entire ecosystem from farmers to ginners to textile mills by providing an effective platform for risk management and price discovery."