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Cotton

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contract specification Cotton
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  COTTONCOTTON INTRODUCTIONGLOBAL SCENARIO = Cotton is essentially grown for its fibre, which is used the world-over in textile manufacturing. = Cotton fibre is one of the most important textile fibres, accounting for around 35% of the total textile fibre used in the world. = Its strength, absorbency and capacity to be washed and dyed, make cotton an adaptable raw material for producing a variety of textile products such as clothes, space suits, household items and industrial products. = Cotton is classified on the basis of staple, grade and character of each bale—staple refers to the fibre length; grade ranges from coarse to premium and is a function of colour, brightness and purity; and character refers to the fibre's strength and uniformity.Cotton production and trade is widely spread across the world, with more than 80 nations cultivating the crop. However, its production, consumption and trade are dominated by a few nations. =  The world cotton production in 2012-13 marketing year (July – August) is forecasted to be 26.25 million metric tonnes (MMT) (154.41 million bales of 170 kg each) as compared with 27.44 MMT (161.35 million bales of 170 kg each) in 2011-12 marketing year. =  The world's four largest cotton-producing countries are China, India, USA and Pakistan. They account for nearly 79% of the world's production. The other major producers include Brazil and Uzbekistan. =  The top three consumers of cotton are China, India and Pakistan, which together account for two-thirds of the world's consumption, which is estimated around 23.3 MMT. Turkey, Brazil and the USA are the other major consumers. = In the recent years, the global trade has been around 7-8 MMT. = While USA is the largest exporter of cotton, accounting for over one-third of the global trade in raw cotton, China is its largest importer. = The Multi Commodity Exchange of India Limited (MCX) is a India-based state-of-the-art electronic commodity futures exchange that facilitates online trading, and clearing and settlement of commodity futures transactions, providing a platform for risk management. MCX offers trading in more than 40 commodity futures contracts across segments including bullion, ferrous and non-ferrous metals, energy, and agricultural and agri-based commodities. MCX is a leading commodity exchange in India, with a market share of 87%* (Q3 FY 2012-13) *In terms of the value of commodity futures contracts traded (Source: Data maintained by FMC) For private circulation only. 31%23%16%9%6%4%11%ChinaIndiaUSAPakistanBrazilUzbekistanOther Countries World Cotton Production 2012-13 36%20%10%8%10%6%10%ChinaIndiaPakistanEast Asia & AustraliaEurope, Turkey & BrazilUSA & CISOther Countries World Cotton Consumption 2012-13 Source: ICAC Release dated March 1, 2013  INDIAN SCENARIO = India's annual production of cotton has been steadily increasing in the recent years supported by a rise in acreage, better genetically modified seeds and improved practices. = India is expected to produce 33.4 million bales of cotton from an acreage of 11.61 million hectares in 2012-13 (October – September). = In India, the yield of cotton is estimated to be at 489 kg per hectare against the world average of 766 kg per hectare. = In India, cotton is planted from the end of April through September, and harvested from October to January, based on the time of sowing. = India's cotton consumption increased by 15% from 21.9 million bales in 2005-06 to 25.3 million bales in 2011-12. This further increased to 27.0 million bales in 2012-13. =  The states of Gujarat, Maharashtra and Andhra Pradesh are the major producers of cotton, accounting for about 75% of the total production. = India has been a major exporter of cotton, since 2005-06 and currently, the world's second largest exporter. It is likely to export 7 million bales of cotton in 2012-13. = India mostly imports Long and Extra Long Staple (ELS) cotton from the US, Egypt, and West Africa. Cotton Balance Sheet   Item2011-122012-13* SUPPLY Opening stock45.7740Crop size353340Imports1225 Total Availability410.77405DEMAND Mill consumption217.68245Small Mill consumption24.6322Non-Mill consumption1620 Total consumption 255.31287Export12781 Total disappearance382.31368Carry forward28.5637 (Quantity in lakh bales of 170kgs) Source: Cotton Advisory Board | * April 2013 estimate Globally, MCX is No.1 in gold and silver, No.2 in natural gas, and No.3 in crude oil* *In terms of the commodity futures contracts traded during CY 2011 (Source: Websites of exchanges and FIA data) www.mcxindia.com India’s major cotton producing states (2012-13) 26%24%22%5%5%7%11% GujaratMaharashtraAPMPPunjabHaryanaOthers Source: Cotton Advisory Board   www.mcxindia.com FACTORS INFLUENCING THE MARKET =  The domestic demand supply scenario, inter-crop price parity, cost of production and international price situation are the major factors that influence prices in the market. = Weather, pests, diseases and other risk factors associated with agricultural crops also have a bearing on cotton production. = Government policies with relation to import, export and Minimum Support Price are significant influencers of cotton prices. = Cotton yarn accounts for around 70% of the total yarn production in India. Thus, the price of cotton is a very important factor that influences the health of India's textile industry. And the Government usually considers both the cotton and textile sectors while deciding on its polices. = Cotton yarn prices at different markets across the country show a high correlation of above 90% with India's raw cotton prices. = Global trade is particularly important for cotton. In addition to around 30% of global cotton fibre production being traded, it is also traded indirectly as yarn, fabric and clothing. = As cotton is used primarily in manufacturing products such as clothing and home furnishings, the overall health of associated industries and the economic well-being of final consumers are important. = New developments in the textile industry, with regard to the adoption of new technology, fibres, mechanisation, and so forth, impact cotton prices in the long run. IMPORTANT WEBSITES www.cotcorp.gov.in | www.caionline.in | www.citiindia.com | www.icac.org | www.fcamin.nic.in |www.agriccop.nic.in | www.futuresource.com |www.dowjones.com | www.fas.usda.gov CONVERSIONS 1 Indian bale170 kg1 Indian Candy355.62 kg of lint cotton100 Indian balesApprox. 48 Candy1 US Bale (480 pound)217.7 Kg MCX reaches out to over 1,770 cities and towns in India through 3,46,000+ trading terminals (including CTCL)(as of Q3 FY 2012-13) 40506070809010011014000150001600017000180001900020000        C     e     n      t     s       /       L       B       R     s       /       B     a       l     e MCX ContinuousICE Continuous Relationship between MCX Cotton Futures and ICE Cotton Futures     1    0    /    3    /    2    0    1    1    1    2    /    3    /    2    0    1    1    2    /    3    /    2    0    1    2   4    /    3    /    2    0    1    2   6    /    3    /    2    0    1    2    8    /    3    /    2    0    1    2    1    0    /    3    /    2    0    1    2    1    2    /    3    /    2    0    1    2    2    /    3    /    2    0    1    3   4    /    3    /    2    0    1    3  Symbol OTTO DescriptionCOTTONMMMYY Trading PeriodMondays through Saturdays Trading SessionMonday to Friday: 10.00 a.m. to 5.00 p.m.Saturday: 10.00 a.m. to 2.00 p.m. Trading Unit25 bales Quotation/Base Value  `   per bale (of 170 Kg)Maximum Order Size1200 bales Tick size (minimum price movement)  ` 10Price QuoteEx-Warehouse Rajkot (Within 100 km radius) excluding all taxes, duties, levies, charges as applicable.Daily Price Limits3% + 1%Initial MarginMinimum 5% or based on SPAN, whichever is higherAdditional and/ or Special MarginAn additional margin (on both buy and sell side) and/or special margin (on either buy or sell side) at such percentage, as may be deemed fit, will be imposed by the Exchange/FMC, as and when is necessary, in respect of all outstanding positionsMaximum Allowable Open PositionFor individual clients: 50,000 balesFor a member collectively for all clients: 150,000 bales or 15% of the market wide open position whichever is higher.Delivery Unit100 bales (170 quintals* or 48 candy approx.) *+/- 5%Basic Delivery CenterRajkot (Gujarat)Additional Delivery CentersJalgaon/ Aurangabad (Maharashtra), Kadi (Gujarat), Abohar/Bhatinda (Punjab), Sirsa (Haryana), Burhanpur (Madhya Pradesh), Adilabad/Guntur (Andhra Pradesh) The discounts with respect to transportation charges from each of the additional delivery canters to the basic delivery center (Rajkot) will be announced by the exchange before the launch of contract.Quality Specifications Physical Ginning Pattern: Roller Ginned Cotton. Saw Ginned Cotton will be Inspection and HVI Mode accepted with discountBasis Grade: Standardised grade as per HVI Middling 31-3, accepted up to 41-3 with premium/discount Staple length - 29 mm (+/- 2mm) with premium/discount. Delivery LogicCompulsory DeliveryDelivery Period Margin25%Due Date RateThe Due Date Rate (DDR) shall be arrived at by taking the simple average of the last three trading days polled spot prices of Rajkot (within 100 Km radius). Note: Please refer to the exchange website for detailed contract specifications and exchange circulars for the latest contract specifications and delivery and settlement procedures. # CONTRACT SPECIFICATIONS OF COTTON # Salient features MCX has strategic alliances with several commodity exchanges of the world        1       1       0       4       1       3 Multi Commodity Exchange of India Limited Exchange Square, Suren Road, Chakala, Andheri (East), Mumbai 400 093 | Tel. no.: +91-22-6731 8888 | Email:   info@mcxindia.com | Website: www.mcxindia.com Customer Support: +91-22-6649 4040 | To get the latest futures prices on mobile: visit http://m.mcxindia.com  or sms “MCX < Commodity name >”  to 58888
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