Trade with Trust

Cotton and
Kapas Futures

Multi Commodity Exchange of India Ltd.

 Cotton and Kapas Futures Cotton and Kapas Futures

Introduction Cotton
The Forward Markets Commission (FMC), Department of Consumer Cotton is one of the most important fiber constituting more than
Affairs, Ministry of Consumer Affairs Food and Public Distribution,
37% share in total fiber usage
Government of India, is the regulating authority of all Futures
Trading in Commodity Futures Exchanges in India. The world consumption of textile fibers has gone up to some
50 million tons now from 15 million tons in 1960. At present the
The Government of India has removed restrictions on futures
average per capita annual consumption of textile fibers in the world
trading in almost all commodities under the Forward Contracts
Regulation Act (FCRA), which include agricultural commodities, is about 8 kg of which 3 kg is cotton
industrial commodities, bullion, base metals and now energy.
Occurrence of price variation in percentage terms in
Multi Commodity Exchange of India Ltd. (MCX), with the permanent Mumbai
recognition from FMC, Government of India has established a
demutualised Nation-wide Multi Commodity Online Exchange for Month on month 0–2 2-5 5 & above
Futures Trading in all the important and essential commodities. variation in % terms
MCX is an ISO 9001:2000 certified exchange. Average prices of J-34 (S.G.)
Cotton between
MCX highlights are as follows
1995-96 to 2001-02 38 29 34
Key Shareholders:
Financial Technologies (India) Ltd. Bank of India Maximum Price Variation in Percentage Terms
State Bank of India Union Bank of India Maximum Variation Percentage
National Stock Exchange Corporation Bank Monthly 12.4
of India Ltd. (NSE) Canara Bank Year 21
National Bank for Agriculture and State Bank of Indore
Rural Development (NABARD) Bank of Hyderabad Average prices of J-34 (S.G.) Cotton between 1995-96 to
HDFC Bank Bank of Saurashtra 2001-02.
Bank of Baroda SBI Life Insurance Corp. Source: East India Cotton Association Ltd, Mumbai
Cotton - Global Scenario
Neutrality - the greatest asset
The biggest cultivators of cotton are China, USA, India, Pakistan,
Strong management team with deep domain expertise
Brazil, etc.
Over 1000 members from 500 cities across India
Industry experts spearheading the Advisory Board China, US and India are the three largest producers of cotton.
Best intermediaries and support agencies However, of them only US is having considerable share in the
Strategic alliance with prominent industry associations- world exports. India and China both fall short of their domestic
Bombay Bullion Association (BBA), Bombay Metal Exchange requirement and are net importers
(BME),Solvent Extractors Association (SEA), Pulses Among the consumers China leads the way being followed by
Importers Association (PIA), The United Planters’ Association India, EU, C-EVR & Turkey, Pakistan
of Southern India (UPASI), India Pepper and Spice Trade According to some estimates, share of GM cotton in total cotton
Association (IPSTA) output may go up from 30 percent at present to 50 percent in
Competitive membership fee structure and operational cost 2005
Optimally priced state-of-the-art technology solutions
The annual opening and closing stock of the cotton provide
Transparent and fair system of automated order matching
considerable cushion against succeeding years crop failure
and online market information
Daily mark to market, real-time price and trade information World Demand & Supply Situation
dissemination Quantity in million Metric tons
Robust risk management system and controls Year Beginning August 2005 04-05 04-05
World Beginning stock 8.11 10.39
International Alliances :
World Cotton Production 26.20 24.40
MCX has signed MOUs with world’s leading commodity World Cotton Consumption 23.40 23.93
exchanges like The Tokyo Commodity Exchange (TOCOM),The World Cotton Exports 7.65 8.09
Baltic Exchange-London, Chicago Climate Exchange (CCX) World Ending stocks 10.39 10.86
and New York Mercantile Exchange (NYMEX). Source: ICAC Release
MCX & Financial Technologies (India) Ltd. (FTIL) in association Important World Cotton Markets
with DMCC, a strategic initiative of Government of Dubai, has New York (NYBOT), largest Cotton futures market
entered into a 50:50 Joint Venture to set up the Dubai Gold &
China, Cotton trading started in 2004 at Shanghai commodity
Commodities Exchange (DGCX)
Exchange

1 © Multi Commodity Exchange of India Ltd. © Multi Commodity Exchange of India Ltd. 2
 Cotton and Kapas Futures Cotton and Kapas Futures

Indian Scenario Major Indian Markets

India is the third largest producer of cotton in the world with Adilabad, Karim Nagar, Khammam, Dhule, SurendraNagar,
production of around 3.95 million MT (Approximately 13% of Bhavnagar, Sriganganagar, Bhatinda, Hisar, Sirsa, Guntur,
world Production) Kurnool, Coimbatore, Gulbarga, Ahmednagar, Akola, Sangli,
Kota, Mumbai are major trading centers.
Area under cotton is around 9.50 million hectares contributing
about 21% in world share and keeps fluctuating owing to
monsoon and other factors Factors Influencing Cotton Markets
Despite having the largest area under cotton in the world, India Weather at all the producing centers. The boll-setting period,
ranks third in world output of cotton due to its abysmally low being the most crucial
average yield of 415 kgs against a world average of 723 kgs
per hectare The area planted, determined by the price of Cotton and
timely onset of monsoon
Cotton is cultivated in almost all the states in the country, the
9 states of Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Pests and diseases attacks and its intensity of damage
Madhya Pradesh, Andhra Pradesh, Tamil Nadu and Karnataka
account for more than 95 percent of the area under output The supply-demand and international price scenario
In India cotton is sown during March to September and Growth of textiles and Garment sectors
harvested during September to April. The peak marketing
season for the crop is during November to March. At present Conversion
about 40 percent of the 5 million hectares of total area under
cotton in India is under hybrid cotton 1 candy = 2.11538 bales = 359.615 Kg
The country has to import about 12 lakh bales of cotton 1 bale = 170 Kg
equivalent to 5.00 percent of the domestic production due to 1 pound = 0.4536 Kg
price and quality considerations
1 Mon of Kapas = 20 kg
The production is highly dependent on the monsoon and
fluctuates between years Web Resources
In India, every year, the output of cotton is estimated by the www.futuresource.com www.dowjones.com
ministry of agriculture and the Cotton Advisory Board (CAB)
www.fsxtra.com www.fas.usda.gov
In India more than 80 percent of the cotton produced is sold out
www.ers.usda.gov www.commodityindia.com
by March 31 every year and the price starts firming up from
April and starts easing only in September when the new crop www.indiancommodities.com www.eagritrader.com
starts arriving in the market
MCX Trading
The major cotton consuming segments are the mills and the
small-scale industry. Their main considerations are for quality Multi Commodity Exchange of India Ltd., established in 2003 and
and price of cotton. However, falling yield leading to high cost already the largest futures multi commodity exchange in India,
of production and falling quality (varietal purity & trash content) provides the premier forum for managing the price risk associated
are driving the domestic consumers to go for imported cotton with cotton and kapas market. MCX is already a dominant center
for gold and silver futures trading.
Indian Demand & Supply
Cotton Year: October to September MCX’s liquidity, price transparency and financial integrity make it a
Quantity in lakh bales of 170 kgs. benchmark for commodity future markets in this part of the world.
Supply 2003-04 2004-05
Opening Stock 24.00 21.00 Orders are entered through MCX Trader Work Station terminals
Crope size 179.00 243.00
Imports 7.21 12.00 A credit–controlled module verifies credit worthiness based
Total Availability 210.21 276.00 on clearing–member predetermined parameters
Demand Orders are matched on price and time priority
Mill Consumption 150.39 163.00
Small Mill Consumption 13.00 17.00 Matched orders are confirmed at each originating terminal.
Non-Mill Consumption 13.71 14.00 Meanwhile, all unmatched orders remain in the system until
Total Consumption 177.10 194.00 matched or withdrawn
Exports 12.11 10.00
Total Disappearance 189.21 204.00 The instant a trade is executed, all participating quote vendors
CARRY FORWARD 21.00 72.00 receive last sale price and quantity data, as well as updated
Source: East India Cotton Association information on best bid, offer and size of each order

3 © Multi Commodity Exchange of India Ltd. © Multi Commodity Exchange of India Ltd. 4
 Cotton and Kapas Futures
As each trade is confirmed, it is routed to the MCX clearing
system for settlement
Clearing member firms adjust buyers and sellers accounts
for positions and margins
MCX Clearing and Settlement
The clearing house of the MCX ensures and guarantees the
settlement of all net settlement liability between the MCX’s Clearing
member firms.
Daily Settlement (Pay-in and Pay-out)
MCX has daily settlement of all transactions conducted on the
Exchange. This process begins with the computation of closing
price at the end of the trading day at which all positions are marked
to market and carried forward to the next day. This closing price is
also called the settlement price, which is calculated for each futures
contract. Once established, the settlement price is used for all
new and open (un-liquidated) positions to compute the pay-in and
payout. The losses and profits of each member is computed at the
end of the day and then collected/ paid next day morning
electronically from/ into the bank account of the member. In case
of default the trading of the member is suspended based on the
rules of the exchange.
Delivery / Cash Settlement
Traditionally taking an offsetting position fulfills contracts. (Thereby
avoiding giving or taking delivery). But when open contracts run
into the delivery period, then contracts are initiated for a delivery.
The seller has the option in tendering a delivery and seller initiates
the delivery process on the First Notice Day of the delivery period.
However when neither the seller nor the buyer has intended to
give or take delivery, then those open contracts on the expiry day
of the contract are cash settled at the due-date rate of the contract.
Due-date rate is the average of the last 5 days closing in the spot
market of the underlying commodity and the futures contract, which
ever is higher.
Why trade MCX Cotton and Kapas Futures?
Importance of Indian cotton industry in World markets and exposure
to global market make it essential to have price risk management
tools. Especially after WTO provision and end of quota regime in
textiles sector it is desirable.
Cotton future at MCX Platform is an important risk management tool
for commercial interests as well as an exciting potential opportunity
for those investors who seek to profit by correctly anticipating
price changes.
5 © Multi Commodity Exchange of India Ltd.
Cotton and Kapas Futures
Cotton producers, merchants and stockist face risk of large value
losses on their production, purchases and stocks from fall in prices.
Similarly the exporters and spinners are exposed to heavy risks
from adverse price increases on their overseas or domestic sale
commitments of fiber or yarn for delivery at a later date. Futures
trading in cotton are likely to give an effective tool in their hand to
hedge their price risk.
Introduction of cotton futures is also likely to improve the cotton
quality (by improving varietal purity and reduce trash content) to
comply with the quality specifications of the underlying as traded
in the exchange.
Trading on MCX provides number of advantages
The contracts are standardized by quality and quantity, widely
accepted and therefore are liquid financial instruments
MCX offers cost efficient trading and risk management
opportunities
Contracts are traded online on a real time trading platform of
MCX, representing a confluence of opinions on future values
and resulting in price transparency and best price discovery
MCX Long staple cotton, Medium Staple Cotton and Kapas
futures prices are widely and instantaneously disseminated,
serving as a ready reference price for the entire cotton trading
community
MCX allow hedgers and investors to trade anonymously through
futures brokers, who act as independent agents for traders
The depth of the market allows the contracts to be easily
liquidated prior to required receipt or delivery of the underlying
commodity
While futures contracts are seldom used for delivery, if delivery
is required, performance is guaranteed. Counter party risk is
absent from transactions executed on the Exchange
Contract performance in the cotton and Kapas futures is
supported by a strong financial system, backed by MCX learing
members
MCX offers safe, fair and orderly markets protected by its
rigorous financial standards and surveillance procedures
© Multi Commodity Exchange of India Ltd. 6
 Cotton and Kapas Futures Cotton and Kapas Futures

Futures Bullish Scenario

Futures contracts are firm commitments to make or accept delivery By November 2004, the futures prices rise to converge with spot
of a specific quantity and quality of a commodity during a specific market at Rs. 22100 per candy.
month in the future at a price agreed upon at the time the commitment
is made. It is observed globally that Approximately 1% of futures Spot Market Futures Market
contracts traded result in delivery of the underlying commodities. August 2004 Sells Nov’ 04 contract at Rs.
Instead the traders generally offset their futures positions before 21600 per candy
their contracts mature. The difference between the initial purchase October 2004
or sale price and the price of the offsetting transaction represents Sells at Rs. 22100 per candy Buys Nov 04 contract at Rs.
the realized profit or loss. 22100 per candy
Hedging Profits Rs. 600 per candy Losses Rs 600 per candy
Transaction resulted in no profit no loss
Futures contract have been used as financial offsets to cash
market risk for more than a century. Hedging allows a market
Hedging Example - 2
participant to lock in prices and margins in advance and reduces
the potential for unanticipated loss or competitive disadvantage.
In August 2004, Pankaj Cotton Mills Ltd. enters into a forward trade
A hedge involves establishing a position in the futures market that to import 260 candy of Long staple cotton from USA. The delivery
is equal and opposite to a position in the physical market. For is scheduled in November 2004.
instance a Cotton traders who holds
To protect itself from upward price movement the company decides
1 ton of cotton will hedge by selling (going short) on 1 ton of cotton to trade in MCX platform to hedge this price risk.
contract. The principle behind establishing equal and opposite
In August 2004, it buys 10 contracts (26 candy each) of MCX Long
positions in the cash and futures markets is that a loss in one
Staple cotton November contract at Rs. 22380 per Candy. It pays
market should be offset by a gain in the other market.
suppose only 3 % of the total value as a good will deposit (margin)
Hedging works because cash prices and futures prices tend to with the exchange, which in other case it had to pay the entire
move in tandem, converging as each delivery month reaches amount upfront in the spot market.
expiration.
Bullish Scenario
Hedging Example - 1
By November 2004, the futures prices rise to converge with spot
In August 2004, Mr. Tapan Desai, Rajkot based Cotton traders market at Rs. 23200 per candy.
receives order to deliver Medium Staple Cotton of 130 candy in
November 2004. Spot Market Futures Market
August 2004 Buys Nov 04 contract at Rs.
However in November Medium Staple Cotton price is expected to 22380 per Candy
rule low. To protect himself from downward price movement he
November 2004
decides to trade in MCX platform to hedge this price risk.
Receives his stock at Sells Nov 04 contract at Rs.
In August 2004, he sells 5 contracts (26 candy each) of MCX Rs. 23200 per Candy 23200 per candy
Medium Staple contract at Rs. 21600 per candy. He pays suppose Losses Rs. 820 per Candy Profits Rs 820 per candy
only 3 % of the total value as good will deposit (margin) with the
Transaction resulted in no profit no loss
exchange.
Bearish Scenario Bearish Scenario
By November 2004, the futures prices fall to converge with spot By November 2004, the futures prices falls to converge with spot
market at Rs. 20800 per Candy. market at Rs. 21970 per Candy.
Bearish Scenario Spot Market Futures Market
Spot Market Futures Market August 2004 Buys November 04 contract at
August 2004 Sells Nov ‘04 contract at Rs. Rs. 22380 per Candy
21600 per candy November 2004
November 2004 Receives his stock at Sells Nov 04 contract at Rs.
Sells at Rs. 20800 per candy Buys Nov ‘04 contract at Rs. Rs. 21970 per Candy 21970 per candy
20800 per candy
Profits Rs. 410 per candy Losses Rs 410 per candy
Losses Rs. 800 per candy Profits Rs 800 per candy
Transaction resulted in no profit no loss
Transaction resulted in no profit no loss

7 © Multi Commodity Exchange of India Ltd. © Multi Commodity Exchange of India Ltd. 8
 Cotton and Kapas Futures Cotton and Kapas Futures

Speculation Cash v/s Futures Prices Relationship

Speculators accept the risk that hedgers seek to avoid, giving the In general, futures markets compensate an individual for the cost
market the liquidity required to service commercial hedge of purchasing a commodity today, storing it and delivering it in the
participants effectively by providing the market with the necessary future. As a result, one would ordinarily expect to see an upward
bids and offers to implement a continuous flow of transactions. trend in prices as contract months go further out. Such a condition
is known as Contango and is typical of many futures markets.
Speculation is the opposite of hedging. A speculator holds no
However, in cotton the flows of demand and production are not
offsetting cash market position and deliberately incurs price risk in
synchronized. Stored inventories absorb demand fluctuations in
order to reap its potential reward.
periods between production times. There is a likelihood of shortage
in the physical market and peak arrival months in the future. This
Speculation Example may cause the spot price to rise above the futures price between
production times. Backwardation, is a condition in which spot price
In August 2004, Mr. Sunder an expert in cotton industry thinks that
is lower than futures or the futures price is lower in the distant
price of Medium Staple Cotton is expected to move up by November
delivery months than in the near delivery months.
2004.
He has idle cash of Rs. 50,000 by which he can buy only 2 candy
of Medium Staple Cotton from the spot market based on the ruling Margin Requirement
price of Rs 21000 per candy. He is not interested to take physical
delivery. Multi Commodity Exchange of India Ltd requires its members to
deposit and maintain in their accounts a certain minimum amount of
He buys 3 contracts (26 candy) of Medium Staple Cotton Nov 04 funds for each open position held. These funds are known as
contracts on MCX platform. He can enjoy a leverage of 25 times as margin and represent a good faith deposit that serves to provide
he has to keep a good will deposit (margin) of suppose only 3 % protection against losses in the market. The Clearinghouse collects
(Rs 50,000) with the exchange. margins directly from each of MCX clearing members who in turn
are responsible for the collection of funds from their clients. Margin
The Medium Staple Cotton futures prices actually move according requirements and contract specifications are subject to change.
to his anticipation and rule at Rs. 22380 per candy in November Please contact the Exchange or your broker for current information.
2004, which gives him a profit of Rs. 1,07640 on his 78 candy buy
position in futures which he squares off by selling in MCX.
Market information Services
Case 1 – Case 2 –
Phone System:
Buy in Spot Market Buy in Futures Market
MCX’s information service department makes available information
Aug 2004 available one hour prior to start of trading and one hour after end
Buys 2 candy of Medium Staple Buys 3 contracts (78candy) of of trading, on the number (022) 56494000
Cotton valued at Rs. 42,000 Nov 04 Medium Staple Cotton
valued at Rs.1638,000 at Internet Access:
Rs.21000 per candy, with a
goodwill deposit of 50,000 with MCX Home page at http://www.mcxindia.com, provides regular
MCX trading and settlement information, including daily open, high, low,
close, volume, open interest of futures contracts traded, as well
October 2004 as contract specifications, MCX announcements etc.
Sells 2 candy of Medium Staple Sells 3 contracts (78 candy) of Price, Volume and Open Interest Histories
Cotton valued at Rs. 44,760 Nov 04 Medium staple Cotton at
Rs.22380 per candy valued at Relevant histories for all exchange-traded contracts are available
Rs.1745640 on MCX website and the same is also available on contacting the
Profits Rs. 2760 Profits Rs. 107640 exchange at: info@mcxindia.com

Thus by correctly anticipating Medium Staple Cotton price Quote Service

movement, Mr. Sunder could enjoy a leverage of 39 times by
investing his capital in Medium Staple Cotton futures market instead MCX’s daily futures quotations are widely disseminated by data
of buying physical Medium Staple Cotton in the spot market. vendors around the world. The details are available on the MCX
website.

9 © Multi Commodity Exchange of India Ltd. © Multi Commodity Exchange of India Ltd. 10
 Cotton and Kapas Futures Cotton and Kapas Futures

Commodities Available on MCX for trading Quality Specifications

Basmati Rice Mustard Oil Basis variety 28.00 to 28.99 mm
Black Pepper Mustard Seed
Brent Crude Oil Nickel Deliverable with discount 27.00 to 27.99 mm (With Discount
Cashew Kernel Polypropylene (PP) of Rs 700 per Candy)
Castor Oil High Density Polyethylene (HDPE) Deliverable with premium 29.00 to 29.99 mm or above
Castorseed RBD Palmolein (With Premium of Rs 500 Per
Chana Refined Soy oil Candy)
Copper Rice
Cotton Long Staple Rubber Rejectable at buyer’s option Below 27.00 mm
Cotton Medium Staple Sarbati Rice Sawginned quality. No premium
Cottonseed Oil Cake Sesame seed
Micronaire
Crude Oil Silver
Silver HNI Basis variety 3.5 to 4.2
Crude Palm Oil
Gold Silver M Acceptable with discount 3.4 (Rs 100/ Candy)
Gold HNI Soy Seed 3.3 (Rs 200/ Candy)
Gold M Soymeal 3.2 (Rs 300/Candy)
Groundnut Oil Steel Flat 4.3 (Rs 100/ Candy)
Guar Seed Steel Long 4.4 ( Rs 200/ Candy)
Guargum Sugar 4.5 (Rs 300/ Candy)
Gur Tin
Jeera Tur Rejectable at Buyer’s Below 3.2 and above 4.5
Kapas Turmeric option
Maize Urad Trash
Masur Wheat Basis 3.00-4.00
Mentha Oil Yellow Peas
Acceptable Below 3 ( 1% Premium)
To receive MCX Comnews (monthly news letter) kindly send a mail
Acceptable 4.01-5.00 ( 1.5% Discount)
to info@mcxindia.com
Rejectable at buyer’s
option Higher than 5
COTTON - LONG STAPLE CONTRACT SPECIFICATION
Strength 21 GMS per TEX at 1/ 8 gauge
Trading unit 55 bales (26 candy approx) Rejectable at buyer’s
Quotation/Base Value Rs./Candy option Below 21
Maximum order size 550 Bales Moisture
Basis 8.5 % maximum
Tick size Rs. 10
(minimum price Acceptable with penalty 8. 5 % to 9. 5 % ( With Penalty
movement) of 2%)
9.5 % to 10.5 % ( With Penalty
Daily price limits 2 %
of 4%)
Price Quote Ex- warehouse kadi (excluding Rejectable at Buyer’s
all taxes) option Above 10. 5%
Maximum Allowable
Open Position For a client: 5500 Bales Other Condition :
For a member collectively for all
clients: 25 % of the open position 1. Only current season Indian crop (October to September) is
of the market at any point of time deliverable.
Delivery
2. Re-tendering of goods delivered in earlier contract on subsequent
Delivery unit 55 bales (93.5 quintals) - 26 contracts would attract Rs. 50 per Candy discount to the
candy approx tenderer per subsequent contract. For example, if cotton
Delivery center(s) Kadi, Rajkot, Akola, Nagpur, delivered in November 2004 contract is re tendered in May
2005 contract, then the amount of discount would be Rs. 150
Sendhwa, Burhanpur, Warangal,
per candy. Out of this, 90% would be passed on to the buyers
Adilabad, Coimbatore
and 10% would be appropriated by the Exchange.

11 © Multi Commodity Exchange of India Ltd. © Multi Commodity Exchange of India Ltd. 12
 Cotton and Kapas Futures Cotton and Kapas Futures

COTTON - MEDIUM STAPLE CONTRACT SPECIFICATION Refraction will be acceptable upto 20 Kg per 4 MT of Kapas
Trading unit 250 Maund (55 bales) Bandhani or Price ceiling floor limits for the life of the contract.
(1 maund = 37.324 kg) Price ceiling of Rs.90/- over and above the base price. The
base price of the contract is fixed at Rs.345/-.
COTTON - SHORT STAPLE (V-797/G-13)
CONTRACT SPECIFICATION
Trading unit 24 Candy (50 bales approx) KAPASIA KHALLI / DHEP CONTRACT SPECIFICATION
COTTONSEED CONTRACT SPECIFICATION Trading unit 5 MT
Trading unit 10 MT Quotation/Base Value 50 kg
Maximum order size 500 MT
KAPAS CONTRACT SPECIFICATIONS
Tick size (minimum 10 paise
Trading unit 4 MT price movement)
Quotation/Base Value 20 Kg
Maximum order size 100 MT Daily price limits 3 %
Tick size (minimum 10 paise per 20 Kg Price Quote Ex- Akola exclusive of all taxes,
price movement) sales tax/VAT, if applicable
Daily price limits 1.5 % Maximum Allowable For a client: 30000 MT
Price Quote Ex-Surendranagar (excluding all Open Position For a member collectively for all
taxes). clients: 25 % of the open position
Maximum Allowable For individual clients: 20000 MT of the market at any point of time
Open Position For a member collectively for all Delivery
clients: 25% of the open market
Delivery unit 50 MT (with tolerance limit of 1MT)
position
which means that is the seller
Delivery
delivers any quantity between 49
Delivery unit 4 MT (200 mons)
MT to 51 MT, it will be construed
Delivery center(s) (1) Within the municipal limits of
as adequate discharge of his
Kadi, Viramgham, Lakhtar
delivery obligation of 50 MT,
Limdi and Bawla
though he will get the Value only
(2) Within 50 Kms of municipal
for actual quantity delivered byhim
limits of Surendranagar
Quality Specifications Delivery center(s) W ithin 30 kilometers of Akola
Variety Fair average Kalyan Cotton of Municipal Limits
Gujarat 13 variety and / or V / 797
Quality Specifications/Deliverable of grades
variety, which can be either hand
made or machine made. Good quality of Akola Undecorticated Cottonseed Oilcake/Kapasia
Delivery standards Unginned and unpressed Raw Khalli (Dhep), 50 kg full Katta Bardana
Kapas bundled as per OA (Oil & Albuminoides) 20% Minimum
specifications given by MCX.
Bandhani or Price The contract would have a price Moisture content
Ceiling / Floor limits for ceiling of Rs.90/- for the life time Basis 10% Maximum
the life of the contract of the contract over and above Acceptable Between 10% - 12% with
the base price and similarly a floor allowance 1:1
limit of Rs.90/- below the base Rejectable at buyers option Above 12%
price. The base price of the
contract is fixed at Rs.345/- for Sand/Silica Maximum 2.5%
the contract over which the price To be Accepted Between 2.5% - 5% with
limit of Rs.90/- would apply. allowance 1:1
Quality Certification Rejectable at Buyers option Above 5%
Delivery Samples must be certified by surveyors approved by Fibre Maximum 28%
MCX Colour Yellow and Green
Proportion of Cotton: Seed in the Kapas shall be 40:60. If the Oil content Above 6%
ratio of Cotton is within 2% tolerance limit (between 38% to Other Conditions There should not be any mixing.
42%), it is acceptable without any premium or discount. If the It should be 100% cottonseed
proportion of cotton is more than 42%, the seller would get a oilcake.
proportionate premium for every percentage. If the proportion
of cotton is less than 38%, the seller would be subject to a Note: Kindly refer the exchange circulars for the latest contract
proportionate discount for every percentage. If the percentage specifications and Delivery & Settlement Procedure.
is below 36%, it is rejectable at buyer’s option.

13 © Multi Commodity Exchange of India Ltd. © Multi Commodity Exchange of India Ltd. 14
 Trade with Trust

Multi Commodity Exchange of India Ltd.

102 A, Landmark, Suren Road, Chakala,
Andheri (East), Mumbai - 400 093.
Tel.: 022-56494000 Fax: 022-56494151
Email - info@mcxindia.com
www.mcxindia.com

Disclaimer: This brochure has been prepared for general information purpose only.
While the Exchange has made every effort to assure the accuracy of the information
contained herein, any affirmation of fact in this brochure shall not create an express
or implied warranty that any example or description is correct. This brochure is made
available on the condition that errors or omissions shall not be made the basis for
any claims, demands or cause of action.