Source: timesofindia.indiatimes.com

Mohammed Akhef

May 15, 2022,

Aurangabad: The cotton association of India (CAI) has written a letter to the Multi Commodity Exchange of India Ltd (MCX), as well as the Union government requesting them to take corrective measures and save the cotton spinning mill industry from getting completely wiped off in the country.

In the latest letter sent on Friday, CAI reiterated its demand to implement its suggestions mentioned in earlier communications, including in the letter dated December 22, 2021. “As on Friday, the trading open interest in MCX cotton futures is only 87,500 bales, which is just a quarter per cent of Indian crop size of 325 lakh cotton bales,” states the letter.

The letter further cites that the USA’s cotton crop is 175 lakh bales and the ICE futures has an open interest of 180 lakh bales, making it over 100% of the USA’s crop size.

“Due to such a low open interest in MCX, the speculators and multi-national companies are pulling up the Indian cotton market every day. Despite having large cotton produce, Indian cotton is trading at merely 20%, compared to ICE futures, which is at 12,000%.

The letter warned the MCX that if this trend is not stopped immediately, it will kill the entire cotton spinning mill industry in India. Citing the MCX open interests for May 2022, which are just a quarter per cent of the total cotton crop size of the country, the letter states that “Such a low open interest and the existing higher exposure limit of up to 90,000 bales available to each participant at MCX are leading to daily speculation at MCX and galloping of cotton prices.”

The letter further states that since MCX prices are reference price for all ginners across India, this kind of speculation is badly affecting the entire textile value chain, while requesting immediate corrective measures to avoid distortion in cotton prices. (Source: timesofindia.indiatimes.com)