India accounts for around 20-23% of global cotton production, but our cotton derivatives market is still pretty underdeveloped.
NCDEX and the Cotton Association of India have now signed a 5-year agreement to push the market further.
This could be a pretty useful move. We have nearly 38% of the world’s cotton farmland and produce more than 20% of global supply, yet we still largely let global markets set the price. Whenever prices swing sharply, local ginners and millers often end up taking the hit.
The idea now is to get more participants from states like Gujarat and Maharashtra to use futures to lock in prices, instead of simply taking the price risk.
What I wanna know is whether this actually brings the cotton industry into the derivatives market…?
If this actually picks up, it could genuinely change how cotton prices are discovered in India. Curious to know what others think, can this get the physical cotton industry to actively hedge through futures?
