MCX commences cotton futures trading from Kadi

The Multi Commodity Exchange of India (MCX) is looking at a larger share of cotton and kapas trading from the state. It has kicked off futures trading from Kadi in Mehsana district.

Mehsana in north Gujarat, is one of the leading cotton growing regions of Gujarat.

"We have revised our focus on kapas and cotton and are looking at a far greater share of cotton futures trading from Gujarat," said Jignesh Shah, managing director of the Mumbai based Multi Commodity Exchange of India, who was in Gujarat over the weekend. "We have initiated futures trading from Kadi," he added.

Shah said north India is the major producer of cotton and kapas and southern India being the consumption centre, Gujarat can act as a facilitator between the two because of its strategic location.

The commodity exchange has also organised a seminar on futures trading in cotton and kapas at Kadi in Mehsana district, on Saturday.

Kapas is that form of the cotton crop that is just picked up from the crop. Kapas is the cotton ball with the seeds inside, while cotton is derived after removing the seeds from the cotton fibres through a process called ginning.

India is the third largest producer of cotton in the world with a production of anound 20 million tonnes per annum, which amounts to about 11 per cent of the world production of cotton.

While the area under cultivation for cotton is around nine million hectares, it keeps fluctuating depending on the kind of monsoon that the country receives.

However, despite having the largest area under cultivation in the world, India ranks third in world output with a average per hectare yield of 300 kilogrammes against a world average of 550 kilogrammes per hectare.

While cotton is cultivated across the country, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh, Tamil Nadu and Karnataka account for 95 per cent of the output.

Commenting on why MCX was offering futures trading in cotton and kapas, Shah said, with the Indian cotton industry getting exposed to world markets in the post quota regime, it is important to have price risk management tools.

"Cotton futures at the MCX platform is an important risk management tool and an exciting potential opportunity for investors seeking to profit by correctly anticipating price changes," the MCX MD said.

MCX has permanent recognition from Government of India for facilitating online trading, clearing and settlement operations for commodity futures markets across the country and is headquartered in Mumbai.

It offers futures trading in 35 commodities including agri commodities, bullion, metals, pulses, oils and oilseeds, plantations, spices and the like.