MCX re-launches cotton futures — to trade now in candy, not bales
Earlier it was a 25-bale contract, now it is a 48-candy contract. Each candy is roughly 355.56 kilograms, which translates into roughly 100 bales.
Rishi Nathani, Chief Business Officer at Multi Commodity Exchange of India Limited (MCX), announced the re-launch of cotton futures on the platform. This news comes after the Securities and Exchange Board of India (SEBI) suspended cotton futures on MCX in August 2022. However, the re-launch of cotton futures on MCX comes with changes in contract specifications, aligning it with the market requirements.
Speaking to CNBC-TV18, Nathani said cotton futures will now be priced in candy instead of bales. "The change in contract specifications will provide a more accurate representation of the market conditions and help in better risk management for the participants," he said.
“Now we are trading in candy instead of bales. Earlier it was a 25-bale contract, now it is a 48-candy contract. Each candy is roughly 355.56 kilograms, which translates into roughly 100 bales,” Nathani said.
Cotton contracts have been launched for expiry in April, June and August 2023, providing the market with a hedge mechanism for ginners, spinners, textile mills and industrial consumers.
India is the world's largest producer of cotton, accounting for 25 percent of the total world production. The re-launch of cotton futures on MCX is a significant development for the cotton market in India, providing participants with an opportunity to manage their risks and hedge against price fluctuations. The launch of cotton futures on MCX will also provide an additional trading avenue for participants and help in price discovery.
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