Sayed Shoeb Pens Winning Essay for ACSA International Cotton Institute

For many years, Meister Media Worldwide has conducted an essay contest for students attending the ACSA International Cotton Institute, held annually in Memphis, TN.  The contest is open to all members of the Institute class who choose to prepare and submit an entry focusing on a key topic of interest to the international cotton industry.

Sayed Shoeb of Noble Natural Resources India submitted the winning essay for the 2014 class.

The editors at Meister Media Worldwide congratulate him on this honor, and we are pleased to share his essay with the global cotton community.

 

 

World Cotton Contract – Blueprint to the Next Big Change

 

By Sayed Aamir Shoeb, Noble Natural Resources India

 

What started as the New York Cotton Exchange in the 1870’s is now trotting towards its first ever truly global contract, which heralds the beginning of a new era in cotton trading.

Scheduled to start in the fourth quarter of 2014, this contract will incorporate growths other than the U.S. With the major growths like India, Australia, Brazil, Benin, Burkina Faso, Cameroon, Ivory Coast and Mali added as the deliverable origins and the delivery points to include Australia and Malaysia in addition to the earlier U.S. delivery points, it opens a huge window of opportunity and will dare the traders to expand and alter their perspective of cotton trading.

However, before going live with the contract, a number of issues and details need to be chalked out and discussed in great detail to make this contract a success, especially the new deliverable origins.

Increased participation from the other parts of the world necessitates the presence of a global contract. India for long has been the second largest producer, as well as the second largest exporter of cotton to the world. In spite of having local domestic futures markets like MCX and ACE, they do not provide sufficient liquidity and have not been very ideal to provide the required hedge to the market participants.

With the introduction of the world contract and an option to deliver Indian cotton, we should see an increased participation from countries like ours in the global market, which, in turn, will increase the liquidity. Local merchants with deep pockets will be more confident in managing their position with a globally-traded risk management tool by their side, which will be highly liquid, giving them the option to give delivery to the exchange. It will also encourage such merchants to enter other markets and trade at a global level.

Especially with a country like India where the government plays an important role in governing the extent of export, it will be a great opportunity for Indian traders to enter foreign markets like Australia and Africa, managing the risk at the same time through the world cotton contract and diversifying their portfolio, giving them the option of switching crops in case of export bans. Moreover, with the introduction of two major southern hemisphere crops, we might see an increased participation on the October delivery month.

With the introduction of this contract, however, there could be a tectonic shift in the way cotton is handled and marketed now in India. If the contract is able to garner enough liquidity, it will push the Indian stakeholders to move towards international standards from the traditional marketing style.

Today, most of the cotton marketed in India is based on the earlier type sample names that have been adapted like Shankar-6, J-34, and Mech, etc. With the world communicating based on International standards, we might see these names getting obsolete in times to come. This would lead to standardization of cotton contracts and will remove the ambiguity between the quality sold and the quality delivered.

Today, the most famous Indian variety that is getting traded internationally is Shankar 6, which is mostly grown in the Gujarat region. This, as such, is a bit unfair to similar varieties of cotton grown in other parts of India like Maharashtra and Andhra Pradesh which trades at a discount to Shankar-6 because of its high demand, irrespective of the fact that the quality is just as same. The sellers in the Indian market will have a wider basket to choose from when delivering a 31-3-36 or any other deliverable HVI standard.

Topics: ,

Leave a Reply

One comment on “Sayed Shoeb Pens Winning Essay for ACSA International Cotton Institute

  1. Excellent write up. A very comprehensive essay on necessity world cotton contract and it’s possible short comings.

International Stories
International

Better Cotton Initiative Joins ISEAL Alliance

March 24, 2016

The Better Cotton Initiative has been accepted as a full member of the ISEAL Alliance by achieving full compliance with the organization’s standard-setting code.

International

No Export Subsidies for Indian Cotton

April 27, 2016

According to the Government of India, the country is not entitled to export subsidies for its cotton.

International

Little Activity on New World Cotton Contract

April 4, 2016

The ICE Futures world cotton contract is off to a slow start.

International

India Taking Proactive Measures to Combat Whitefly

March 30, 2016

As planting season approaches, the government of India is taking proactive measures to combat likely white fly infestations in the country's cotton-producing Northern States.

International

China Considering Sale from Cotton Reserves

January 18, 2016

China’s government is reportedly considering plans to sell some of its cotton stockpile, a move that could move Chinese domestic prices lower and reduce import demand.

International

Zhangjiagang Becomes First Certified Laboratory in China

November 17, 2015

Zhangjiagang Academy of Inspection and Detection has been certified as a “laboratory of choice” by ICA Bremen.

International

ICA Names New President and Directors

November 12, 2015

Jean-Marc Derossis was elected president of the International Cotton Association during the organization’s Annual General Meeting in San Francisco, CA.

Around The Gin
Product News

Meister Media Worldwide Website Relaunches With New Resources

April 22, 2016

Meister Media Worldwide — publisher of Cotton Grower magazine – has relaunched its corporate website, highlighting information and services available from one of agriculture’s leading media companies.

Product News

ReinCloud Promises Remote Control

April 18, 2016

New software set to combine irrigation management and data collection – all in the palm of your hand.

Product News

Search Begins for Deltapine Class of 17

April 14, 2016

Deltapine’s NPE program is nine years old, and the search for the company’s Class of 17 cotton varieties is underway.

Product News

Texas Farmer First to Plant Enlist Cotton Variety

April 11, 2016

Dean Hansen of El Campo, TX, was the first cotton grower in North America to plant the first commercially-available cottonseed with the Enlist cotton trait.

Product News

New Options for Roundup Ready PLUS Program

March 25, 2016

The Roundup Ready PLUS Crop Management Solutions program for 2016 includes a new tool for weed management and new incentives for farmers looking to fight insect pests in corn.

Product News

Greenleaf Launches easyFlow Closed Transfer System

March 24, 2016

Greenleaf Technologies has launched the company’s new easyFlow closed transfer system for the North American market.

Product News

AgLogic Launches Aldicarb Product in Georgia

March 15, 2016

Growers in Georgia will be able to use a new aldicarb pesticide in 2016 for nematode and early season pest control.

Product News

Moss Joins Mid-South Team for Brake Herbicide

February 29, 2016

Ag sales veteran Larry Moss has joined SePRO Corporation as a technical specialist for Brake herbicide in the Mid-South.

Latest News
International

No Export Subsidies for Indian Cotton

April 27, 2016

According to the Government of India, the country is not entitled to export subsidies for its cotton.

International

Little Activity on New World Cotton Contract

April 4, 2016

The ICE Futures world cotton contract is off to a slow start.

International

India Taking Proactive Measures to Combat Whitefly

March 30, 2016

As planting season approaches, the government of India is taking proactive measures to combat likely white fly infestations in the country's cotton-producing Northern States.

International

Better Cotton Initiative Joins ISEAL Alliance

March 24, 2016

The Better Cotton Initiative has been accepted as a full member of the ISEAL Alliance by achieving full compliance with the organization’s standard-setting code.

International

India to Produce Less Cotton This Season

February 29, 2016

India is expected to produce about 3 million bales less cotton for the season ending in September 2016, compared to a year ago.

International

China Losing Top Cotton Importer Status

February 3, 2016

China has been surpassed by Vietnam as the world’s top cotton importer.

International

China Considering Sale from Cotton Reserves

January 18, 2016

China’s government is reportedly considering plans to sell some of its cotton stockpile, a move that could move Chinese domestic prices lower and reduce import demand.

International

Zhangjiagang Becomes First Certified Laboratory in China

November 17, 2015

Zhangjiagang Academy of Inspection and Detection has been certified as a “laboratory of choice” by ICA Bremen.

International

ICA Names New President and Directors

November 12, 2015

Jean-Marc Derossis was elected president of the International Cotton Association during the organization’s Annual General Meeting in San Francisco, CA.

International

ICAC Cooperative Research Network for Cotton Meets in Egypt

November 3, 2015

Ninety-seven delegates from 10 countries attended the ICAC meeting of the Inter-Regional Cooperative Research Network on Cotton for the Mediterranean and Middle East Regions.

International

Chinese Cotton Demand at All-Time Low

October 16, 2015

Chinese cotton imports reached an all-time low in September, as an economic slowdown and large domestic inventories continue to weigh on demand.

International

Unpicking Cotton?

October 14, 2015

Uzbekistan officials asked local growers to "unpick" some of their harvested cotton. Here's why.

International

ICAC Expects Stable World Cotton Trade in 2015/16

October 5, 2015

The International Cotton Advisory Committee has released its latest projections for world cotton trade.

International

ICA Bremen Brings Cotton Classing Training to Korea

September 30, 2015

ICA Bremen took its Cotton Classing training course to Korea in early September.

International

U.S. and India Announce Bilateral Collaboration for Technical Textiles

September 25, 2015

Bilateral collaboration and technical exchanges between the United States and India in technical textiles are planned as part of a recently-announced strategic and commercial cooperation between the countries.