Cotton futures trading, suspended on the Multi Commodity Exchange of India Ltd. (MCX) for last five months, is expected to resume soon.
The suspension was initiated to curb excessive speculation and its removal will be a relief for farmers reliant on the market for price signals.
Leading business daily Mint quoted Textile Secretary Rachna Shah, “The advantage with MCX is that it helps in price discovery and also risk hedging, and we do feel that it should continue to function in that respect.”
She further added that while there were concerns on speculation, to address those, the product advisory committee was constituted with representatives of the industry. The committee has engaged with SEBI in terms of contract specification and quality standards. I am very hopeful that future trading will be restarted very shortly. Most of the issues are now resolved, and it is really a matter of time.
T. Raj Kumar, Chairman of the Confederation of Indian Textile Industry (CITI) who also headed the product advisory committee, said that negotiations with MCX are in the finalisation stage, and the new restructured contract should be coming out shortly.
It is being said that the farmers have been hoarding cotton as they are not sure of the price. The farmers give seed cotton to ginners, and ginners give lint cotton to MCX. So, at the moment, this cycle itself is not starting because of a lack of price discovery.