Ludhiana, February 20, 2015 (Rajinder Ahuja): The awareness programme focused on hedging cotton price exposures, jointly organized by Multi Commodity Exchange of India Ltd (MCX), Forward Markets Commission (FMC) and North India Textile Mills’ Association in Ludhiana today received a good response.
The experts during the program seen lightened participants on the need to manage price risks and volatility associated with cotton prices. They explained in detail about the MCX cotton contract, which has been well accepted by the cotton value chain players across India millers, ginners, exporters and spinners among others.
The interactive session further focused on fundamentals of commodity trading, introduction to cotton futures, benefits and importance of hedging. The market participants were also explained about the technicalities of working of the commodity markets with respect to price discovery, transparency and risk management mechanism in trading and settlement of transactions. Besides they learned about the role of FMC in regulating and monitoring the functions of commodity exchanges.
While making a presentation to the members of NITMA, Deepak Mehta, Vice President PKMT, MCX said, “The cotton futures contract offered by the Exchange meets the needs of the whole cotton value chain including farmers, ginners, traders, spinners and textile manufacturers. Further MCX cotton contract’s specification is attuned to the physical market best practices in terms of staple length, micronaire and tensile strength. This combined with several delivery centers across the country, positions the contract favourably to serve the cotton stakeholders.”
“Moreover, the healthy correlation between the international benchmark cotton prices of the Inter-Continental Exchange at USA and MCX cotton prices also proves the efficiency of MCX to not just discover the local cotton prices but also in providing an efficient hedging platform to the cotton exporters and importers”, he further added.
Sharad Jaipuria, President, North India Textile Mills’ Association said, “The volatility as well as high variations in prices of cotton have increased the risks, which need to be addressed to protect profitability margins of the cotton value chain participants. We are glad to be associated with MCX in organizing this programme as it is necessary to create awareness amongst cotton trade participants on the need to hedge their price exposures effectively.