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Cotton bodies say 'NO' to cotton future trading
14
Oct '11
Stakeholders from all India cotton ginning sector converged together and concluded to refrain from futures trading in cotton henceforth.

Last Saturday, a meeting was held by All India Cotton Ginners' Association (AICGA). Representatives of various cotton bodies namely, Mr. Dhiren Sheth (President – CAI, Mumbai), Mr. Dilip Patel (President -AGCGA), Mr. Bharat Vala (Saurashtra Ginners' Association), and ginners associations of Madhya Pradesh, Karnataka, Andhra Pradesh were present to discuss the pros and cons of the cotton future trading.

Post meeting, they all arrived at the decision that no one from the sector -be it factory owner, ginner or farmer, will venture into futures trading for cotton. If anyone wishes to bet on forward trading then it will be at proprietor's own risk.

Mr. Saurin Parikh, General Secretary, All Gujarat Cotton Ginners Association (AGCGA), describes- “Forward trading is very uncertain,” while speaking to Fibre2fashion.

He observes that whether future traded cotton prices go up or down, in both the cases it is gambled loss to someone, and in such cases, a lot of people make wrong decisions and incur huge losses.

“So, none of us prefers to venture into future business,” declares the GS, in a determined tone.

In a talk with Fibre2fashion team, President of Punjab Ginners' Association, Mr. Bhagwan Bansal, who was also present in the meet, explains the reason behind 'No' to cotton future trading.

Mr. Bansal illustrates, “For instance, if the rate of cotton today is Rs. X and someone goes in for futures trading for November at a rate of Rs. X+, but the prices fall/rise considerably. In such a situation, the person on losing end may repudiate or withdraw from the deal thereby raising strong disputes.”

“Therefore, we have decided to deal only into spot business and completely discourage futures or forward trading”

The president further informed that with a common consensus, the stakeholders in the sector have summed up to freeze the rate of ginned cotton at Rs. 700 per bale, at all India level. He made a special mention that this rate is fixed with due consideration to increasing inflation rates, machinery costs, spare parts, property, labor wages, fuel-energy costs and such influential factors.

Fibre2fashion News Desk - India

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