NCDEX launches cotton seed futures contract

National Commodities & Derivatives Exchange Ltd (NCDEX) today announced launch of its cotton seed futures contract. NCDEX is launching cotton seed futures contract, which will be available for trade from January 2, Exchange said in a statement here. The contract is designed to help crushers of cotton seed, ginners and various other value chain participants to hedge their risk.

As per the contract specifications, contract will be of industrial grade cotton seed. It will have basis centre at Akola in Maharashtra and additional delivery centers at Yavatmal, Aurangabad and Rajkot. The tick size will be Re 1 and lot size will be 10 MT. "The launch of cotton seed futures contract marks a further initiative from NCDEX for the benefit of the market participants. India is one of the major cotton seed producing countries in the world. This contract is ideal for price risk management needs of the ginners, oil millers, stockists, etc.

Also Read:Indices hit record highs, but did investors make money?

"We expect NCDEX cotton seed futures contract to add tremendous value to the existing cotton business stakeholders," NCDEX MD & CEO Samir Shah said. China, India, USA, Pakistan and Brazil are major cotton seed producing countries in the world. The total world production of cotton seed for the current year is 44.49 million MT out of which India produces 10.6 million MT which is contributed mainly by Gujarat, Maharashtra, Andhra Pradesh, Punjab, Haryana and Madhya Pradesh.

The production of cotton seed in India has increased in the last 5 years. In India, cotton seed is mostly used as a raw material to produce cotton seed oil cake and cotton oil, both of which have very good domestic market.