Trading in the new cotton futures contract commenced on Monday at the MCX.
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The new segment was introduced on January 31.
According to a press release, the new contract is more representative and will help real price discovery. It will also provide a platform for the textile industry to hedge its risk from adverse price volatility. Farmers will have a reference price while taking a decision to sell cotton in the market.
During cotton season 2021-2022, Indian cotton prices touched a peak of more than ₹ 1 lakh a candy in May 2022. The textile industry had raised concerns of less open interest and speculation through trading of cotton future contract on the MCX, leading to distortions in domestic cotton prices. The matter was raised at a meeting of the Textile Advisory Group (TAG) in July last year. Subsequently, the Product Advisory Committee of MCX was re-constituted to include representatives of the textile value chain, according to the release.