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

Reinhart Named New ICA President

October 25, 2016

The International Cotton Association named its 2016-17 leadership team – headed by President Jürg Reinhart – during the organization’s annual general meeting in Liverpool.

International

Indian Cotton Association Opposes Stockpiling Program

October 27, 2016

The Cotton Association of India is opposing the creation of a cotton stockpiling program for the country.

International

India: Higher Production on Less Acreage as New Season Begins

October 25, 2016

India’s Cotton Advisory Board is estimating 35.1 million bales of cotton production in the country during the new growing season that began October 1.

International

Next Year’s Indian Cotton Crop to Remain Flat

August 30, 2016

The Indian cotton crop for the next season beginning in October is expected to remain at the same level as the current year.

International

Indian Government to Sell Cotton Stock

July 18, 2016

The Government of India has directed the Cotton Corporation of India to sell its entire cotton balance stock to offset the abnormal price rise.

International

Indian Spinning Association Works to Calm Current Cotton Situation

July 15, 2016

The Southern India Mills’ Association has called for calmness among spinners in India in the wake of the country’s downward cotton production estimate.

International

Indian Cotton Production to Decline

July 14, 2016

The Cotton Advisory Board of India has revised its estimate for this year’s cotton supply and demand situation in India, placing production at its lowest total in five years.

Around The Gin
Product News

Valent Introduces Valor EZ Herbicide for 2017

December 1, 2016

Valent has introduced Valor EZ Herbicide as a residual herbicide partner for the new next generation seed systems in cotton and soybeans.

Product News

Wearable Cotton Sensors Developed

November 29, 2016

Conductive cotton fabrics have been developed into flexible wearable sensors, creating new options for cotton textiles.

Product News

Dow AgroSciences, U.S. Farmers Disagree with Proposal to Revoke Chlorpyrifos Tolerances

November 10, 2016

Dow AgroSciences is standing by the safety of proper use of chlorpyrifos, in the face of EPA’s release of a pre-publication copy of the Notice of Data Availability related to its assessment of human health risks associated with the insecticide.

Product News

Advanced Germplasm and Traits Help Growers Thrive in Cotton

November 7, 2016

PhytoGen offers options to improve fiber quality and control weeds, helping growers to out-best their best and thrive in cotton.

Product News

EPA Sets Comment Period for Enlist Duo Label Expansion

November 2, 2016

The U.S. EPA has set a public comment period until December 1 for proposed label amendments for Enlist Duo, which would allow use on Enlist cotton and extend product use on all Enlist crops to 19 other states.

Product News

Helping Cotton Growers Be Good Neighbors

November 1, 2016

Good fences make good neighbors. But these days, on-target herbicide applications also can help make growers good neighbors.

Product News

Americot Offers New XtendFlex Cotton Varieties for 2017

October 28, 2016

In 2017, Americot will offer three new Bollgard II XtendFlex varieties and one new XtendFlex only variety to cotton growers.

Product News

Bayer Delivers Right Combinations for Performance and Profit

October 27, 2016

The extensive economic data documenting earnings from FiberMax and Stoneville varieties helps make the Bayer lineup the first stop for variety decisions.

Latest News
International

Indian Cotton Association Opposes Stockpiling Program

October 27, 2016

The Cotton Association of India is opposing the creation of a cotton stockpiling program for the country.

International

India: Higher Production on Less Acreage as New Season Begins

October 25, 2016

India’s Cotton Advisory Board is estimating 35.1 million bales of cotton production in the country during the new growing season that began October 1.

International

Reinhart Named New ICA President

October 25, 2016

The International Cotton Association named its 2016-17 leadership team – headed by President Jürg Reinhart – during the organization’s annual general meeting in Liverpool.

International

Could Blockchain Transform International Cotton Trade?

October 24, 2016

A recent cotton shipment processed and executed using blockchain – the technology that drives bitcoin – could represent a big breakthrough for international cotton trade.

International

Indian Textile Industry Seeks Cotton Stability Support

October 3, 2016

The Indian textile industry has asked the government to provide a support mechanism to counter high volatility in cotton prices.

International

Next Year’s Indian Cotton Crop to Remain Flat

August 30, 2016

The Indian cotton crop for the next season beginning in October is expected to remain at the same level as the current year.

International

Indian Government to Sell Cotton Stock

July 18, 2016

The Government of India has directed the Cotton Corporation of India to sell its entire cotton balance stock to offset the abnormal price rise.

International

Indian Spinning Association Works to Calm Current Cotton Situation

July 15, 2016

The Southern India Mills’ Association has called for calmness among spinners in India in the wake of the country’s downward cotton production estimate.

International

Indian Cotton Production to Decline

July 14, 2016

The Cotton Advisory Board of India has revised its estimate for this year’s cotton supply and demand situation in India, placing production at its lowest total in five years.

International

New Leadership, Export Program for Indian Textiles

July 6, 2016

India’s textiles industry is benefitting from newly-established leadership and a program designed to increase garment exports.

International

Indian Association Wants Free Trade for Cotton

June 27, 2016

The Cotton Association of India is urging the Government of Pakistan not to support the call for an export ban on cotton by the All Pakistan Textile Mills Association.

International

Update on Indian Cotton Textile Sector

June 15, 2016

By Dr. Seshadri Ramkumar The Indian government implemented its largest ever minimum support price (MSP) scheme through Cotton Corporation of

International

Jack McCarty Named ICAC Researcher of the Year

May 31, 2016

Dr. Jack C. McCarty of Mississippi State University was named Researcher of the Year for 2016 by the International Cotton Advisory Committee.

International

New Cotton Traceability System Reaches Final Testing

May 9, 2016

An inexpensive traceability system to prove the authenticity of organic and other niche cottons could be available by the end of the year, says ICA Bremen.

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.