MCX launches contracts in seed cotton

The Multi Commodity Exchange (MCX) has launched the April 2007 kapas (raw-cotton or seed cotton) contracts for the third successive year.

Gujarat's Kalyan Cotton of varieties 13 and V-797 will be permitted for trade. The daily price limit has been fixed at 3 per cent with an initial margin of 4 per cent and a tick size of 10 paise, said Jignesh Shah, MD and CEO, MCX.

The daily price limit would be relaxed by an additional 3 per cent up to 6 per cent, as per the direction of the Forward Markets Commission (FMC). In case of additional volatility, a special margin at a percentage deemed fit would be imposed immediately on both the buy and sell sides, said Shah.

The size of the contracts will be 4 tonne (200 maund) each and the delivery centres will be within 50 km of the municipal limits of Kadi, Viramgam, Lakhtar, Limbdi, Sunrendranagar and Bawla, added Shah.

"Futures trading in kapas is likely to give an effective tool to farmers and traders to hedge their price risk. A majority of the traders are awaiting to trade in kapas and the exchange has received widespread response from major cotton trading centres," revealed Shah.

Abohar (Punjab), Sirsa (Haryana), Sri Ganganagar (Rajasthan), Kadi, Rajkot and Surendranagar (Gujarat), Sendhwa (Mahdya Pradesh), Jalgaon, Akola and Yavatmal (Maharashtra) and Guntur and Adilabad (Andhra Pradesh) are the important kapas trading centres in the country.