01 Dec '22

(Fibre2Fashion News Desk (KUL): India’s Multi commodity Exchange (MCX) is likely to announce the lifting of the ban on cotton future contracts. The launch of the new cotton future contracts could also be announced with revised specifications. January 2023 cotton future contract may be launched soon, and subsequent contracts will be launched at an interval of 2-3 months instead of monthly. 

Cotton Product Advisory Committee (PAC) has finalised the changes in the specifications after detailed deliberations with the entire textile value chain, which often complains regarding the wild volatility in cotton future trade. MCX had expanded the committee to include more representation from the textile value chain. 

For long term solutions of industry’s concerns, SEBI, MCX and cotton value chain participants have decided that the cotton contract specifications shall be revisited and modified in consultation with the product advisory committee of the exchange and other stakeholders including members of the Textile Advisory Group.

As short-term corrective measures, SEBI had suspended trading in all-cotton futures contracts on MCX from January 2023. Therefore, cotton contracts are temporarily not available for trading till the revised contract specifications are finalised. In the last week of August 2022, cotton future contracts of January 2023 and onwards were temporarily restricted for one month.

But the restriction was extended due to the delay in revision of contract specifications. 

Currently, only one cotton future contract is available for December 2022 for trade. Consumer industry, traders, importers, exporters, and investors trade mostly in immediate month and next month contracts. Therefore, there is a dire need to launch January 2023 contract. Traders and buyers in spot market are lacking future contracts for market direction. 

“The committee has already finalised the revision of specifications of cotton future contract. January cotton contract of MCX may be announced very shortly,” a veteran industry source told Fibre2Fashion.

Regarding the changes in the specifications, he said that cotton future contracts will come at an interval of 2-3 months like ICE cotton. The committee has recommended some other changes in the specifications which will be announced with the launch of the January 2023 contract.