NMCE launches futures trading in cotton

National Multi-Commodity Exchange of India (NMCE), the country's third largest commodity bourse, today announced the launch of futures trading in cotton (Kapas).

"I believe futures trading in cotton will be found useful by all types of market players and maximum stakeholders, big and small, should be able to participate," Forward Markets Commission Chairman B C Khatua said after the inaugural trade.

NMCE started offering May 2009 contract in V-797 variety (Kalyan kapas). The margins for the cotton contracts will be 5 per cent and the delivery samples will be certified by NMCE approved surveyors, the exchange statement said.

The deliveries would be tendered in the multiples of 4,000 kg, with delivery center located at Surendranagar district in Gujarat, it added.

NMCE's Managing Director Kailash Gupta said there would be reasonable liquidity in Surendranagar-based cotton contracts during the current cotton season.

"Our main aim in choosing V-797 cotton futures is to provide a hedging facility for price volatility in cotton trading. Analysis carried out by NMCE has found that contracts in these varieties act as a good hedge for price volatilities," NMCE Director Sudip Bandyopadhyay said.

Cotton is a very important commercial crop in the country with an annual production of 32.2 million bales. One bale is equal to 170 kg.