INSUBCONTINENT EXCLUSIVE:
in the raw material basket of the Indian textile industry
The global cotton market has been marked by high price volatility and uncertainties, largely on account of factors beyond the control of any
stakeholder group or even government
Anannualized volatility of about 13 percent in cotton prices during 2017-18 is much more than the margins of most textile mills
These exemplify the dire need for them to hedge the price risk in order to protect their bottom lines
Textile millers also have a perceived need to access appropriate cotton prices which have been discovered in a transparent and regulated
exchange platform with large and diverse participation.
MCX not only provides a robust and efficient platform for price discovery and risk
management in cotton but also undertakes several educational and awareness activities to sensitize stakeholders about the modalities of
using the derivatives platform
All the large textile mills in the Northern part of India are associated with NITMA and the combined turnover of its members is approx
33,000 crores in Domestic market and 3400 crores of exports
The MoU with NITMA will enable the Exchange to reach out to a large stakeholder group, representing more than 100 members and their
stakeholders in the cotton value chain across North India - one of the most prominent cotton growing, processing and textiles regions of the
country.
Speaking on the occasion, Mr
instruments for price discovery and risk management for multiple stakeholder groups across the cotton value chain, including cotton textile
The preponderance of cotton as raw material in the textiles industry and continuing high volatility in cotton prices mean that it is
imperative for the managers of cotton mills to create appropriate risk management strategies for ensuring business sustenance
Given the long history and prominence of cotton textile industry in North India in terms of production, employment and exports, as also the
active presence of NITMA in this region, I am sure we shall be able to effectively propagate and educate our common stakeholders about the
liquid cotton futures contract
benefits, techniques and strategies of risk management using derivative contracts
The cotton consumption by our members is approximately 25% of the total cotton produced by India
As such, we appreciate the criticality of risk management not only for the business enterprises of our members but also the textiles sector
Towards this end, we shall be able to leverage the MoU to gain relevant knowledge from MCX about participating in the cotton derivatives
