NCDEX launches cotton futures contract

29 mm cotton futures aims to address risk management requirements of value chain participants of cotton

National Commodity & Derivatives Exchange Limited (NCDEX), a leading agricultural commodity exchange in the country, today said it has launched cotton futures contract.

NCDEX has incorporated few key modifications into the contract specifications of its earlier contract, so as to align with current industry norms & facilitate direct delivery mechanism.

The 29 mm cotton futures is aimed to address the risk management requirements of the value chain participants of cotton, an exchange release said here.

"We expect to find widespread participation in this contract from ginners, spinners and exporters of this country. Direct delivery model is aimed to ensure a smooth transfer of goods from seller to buyer and with greater effectiveness," NCDEX Chief Business Officer Vijay Kumar said.

In the direct delivery process, the seller will directly deliver the cotton bales to buyer. The seller can deliver the lots (of 100 bales each), either in Rajkot (basis center) or in Kadi (additional delivery center), both of which are at par.

It is a compulsory delivery contract with seller having a window starting from 5th of the expiry month to tender the delivery and the entire settlement cycle would be completed within 8 days from the day of tendering, the release said.