Contract Specification


  • Kapas is unginned cotton or the white fibrous substance covering the seed that is obtained from the cotton plant. Ginning separates the lint (about one-third in weight) from the seed (two-thirds in weight). Lint, commonly known as rui in Hindi, is the raw material used for manufacturing of cotton yarn or thread, which is further woven to make fabrics.
  • Cotton's strength, absorbency, and capacity to be washed and dyed makes it adaptable to a considerable variety of textile products. Cotton seed is crushed to make cottonseed cake, which is used in livestock feed; and cottonseed oil which is the 5th major edible oil consumed in the world.
  • Cotton is classified according to the 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. The biggest cultivators of cotton are America, India, China, Egypt, Pakistan, Sudan and Eastern Europe, with China, the U.S. and India being the three largest producers of cotton.
  • Although cotton is cultivated in almost all the states in India, ten states—Gujarat, Maharashtra, Andhra Pradesh, Telangana, Karnataka, Punjab, Haryana, Rajasthan, Madhya Pradesh and Tamil Nadu—account for more than 95% of the area under cultivation.
  • In India cotton is sown during March to September and harvested during September to April. The peak marketing season for the crop is during November to March.
  • The realities of the market call for efficient risk management techniques that are important for participants, such as producers, exporters, marketers, processors, and SMEs. When the future is unknown, modern techniques and strategies, including market-based risk management financial instruments like ‘Kapas Futures’, offered on the MCX platform can improve efficiencies and consolidate competitiveness through price risk management.

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 influencing prices in the market.
  • Weather, pests, diseases and other risk factors associated with agricultural crops also have a bearing on cotton production.
  • Government policies on import, export, and minimum support price are significant influencers of cotton prices.
  • Cotton yarn prices in 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 the global cotton fibre produced being traded, it is also traded indirectly as yarn, fabric and clothing.

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