NCDEX imposes special margin on Kapas from March 22

As kapas prices fell by more than 7% within a fortnight, the National Commodities and Derivatives Exchange ( NCDEX) has imposed special margin money of 5% on short side of all running Kapas contracts from Tuesday (March 22) onward.

Analysts say that the exchange has taken this move to stop any further downfall in kapas prices. "From a high of Rs 803.5/20 kg on March 7, kapas prices hit a low of Rs 741.5/20 kg on March 21. The special margin will help to curb the downfall in prices," said Pallavi Munnankar, research analyst, Geofin Comtrade.

Though India's cotton production is expected to be lower this year, international developments had a negative impact on the future prices. According to government estimates, cotton yields in Gujarat, the top cotton producer in the country, are expected to reach the lowest levels in last 10 years. While, the Cotton Association of India too has reported lower cotton arrivals. "The rumours about China likely to offload its stocks had a negative impact on the entire cotton complex," said Munnankar.