Soon, a new cotton future contract will be launched by the Mumbai-based Cotton Association of India.
The association, formerly known as East India Cotton Association, will move an application in this regard before the FMC soon.
The association has Futures contract in lint cotton (without seed) while other exchanges trade in kapas which is unginned cotton with seed.
The association is working on three to four varieties of new cotton contracts based on quality, which will include 25 mm, 27 mm and 29 mm staple length cotton contracts. Once contracts are ready the body will apply to FMC.
Volume of cotton traded on their exchange are almost negligible while three years back the exchange was clocking a turnover of 200 units per day with each unit of 500,000.
The association is experimenting by formulating new contracts and hope to generate volumes.
Futures trading in cotton has not picked up on the commodity exchanges in comparison to other agri commodities and that is the reason why these exchanges are launching new contracts.
India is likely to produce around 32 million bales of cotton in 2007-08 which is above 27 to 28 million bales produced in 2006-07.
NCDEX will also launch Shanker Kapas contract while it is already having kapas V797 contract on its exchange.
The contract on NCDEX generates a daily turnover of Rs 20 to Rs 25 crore. On MCX also Kapas generates low turnover. Turnover of the Surendranagar Cotton Oil and Oilseed Association has drastically dropped by over 80 per cent since 2003 to current daily turnover in the range of Rs 15 to 20 crore. The Surendranagar exchange is not an electronic exchange. The exchange trades in kapas V797.
