Multi Commodity Exchange of India Ltd (MCX) has signed a Memorandum of Understanding (MoU) with Indian Cotton Federation (ICF).The MoU with MCX will enable ICFs members to effectively participate in the exchanges knowledge-sharing initiatives to understand the benefits, techniques and strategies of risk management using cotton futures contracts.
The agreement is further designed to facilitate potential collaboration in areas such as organising awareness events for cotton value chain participants, including farmers across the southern belt; installation of price ticker board at textile parks; and joint representation to ministries and regulators for further development of the sector, among other activities.
India is the leading producer of cotton in the world, followed by China and the US. As per the government's third advance estimates, Indian cotton production in 2017-18 (July-June) is estimated at 3.6 crore bales, higher than last year's production of 3.4 crore bales. According to Cotton Association of India (CAI), the countrys cotton exports are estimated to be around 100 lakh bales (of 170 kg each) during the 2018- 19 (marketing year) period. The overall cotton shipment is likely to cross 70 lakh bales during the ongoing 2017-18 marketing year (October to September).
During the MoU signing ceromony, Mr. Mrugank Paranjape, MD & CEO, MCX said “I am extremely pleased with this development, as this MoU signals a long term engagement between MCX and ICF to work together towards undertaking several educational and awareness activities to sensitize cotton stakeholders about the modalities of using the derivatives platform. In the current scenario, awareness on importance of risk management for cotton stakeholders is crucial as several factors such as vagaries of weather, pest attacks and exports have a bearing on cotton production and prices”
J Thulasidharan, president, Indian Cotton Federation said, “We are happy to have signed this MoU with MCX.”
“Price volatility has been significant in cotton and has been affecting its stakeholders. Hence it is important for all stakeholders of the cotton industry – farmers, exporters, ginners and millers – to undertake appropriate risk management in order to stay profitable and competitive. Thanks to MCX for the market-based tools such as cotton futures that provide the most effective risk management practices today," Thulasidharan added.