Page 15 - 08 Cotton SA March 2016

Continue from p 14 last irriGatioN aNd defoliatioN
Malaysian Import Laws

In January 2015 Malaysia im-
plemented a new import regime.
In light of the new import rules, we
worked with market participants
to confirm how the regime would
apply to a world contract’s origins
and to assess the viability of Malaysia
as a delivery point. The Solution: As
a result of our collaboration with
customers and analysis of new
Malaysian import laws, we were
able to maintain delivery points
in Malaysia and add to additional
delivery locations at ports in Taiwan.

The Result: ICE World Cotton

The result of our collaborative efforts
with the cotton trade, American
Cotton Shippers Association
(ACSA) and International Cotton
Association (ICA) is the ICE World
Cotton Contract, which was launched
on November 2, 2015 and will have
its first delivery month in May 2016.
Most key terms of the new World
Cotton contract are identical to the
terms of the No. 2 contract: price
quote (US cents per pound), contract
months (March, May, July, October
and December), trading hours and
settlement at expiration (physical
delivery in exchange-licensed ware-
houses). The contract size of the new
contract is slightly larger, at 55,000
pounds.
The key differences between the new
World Cotton contract and the No. 2
are the par quality, deliverable origins
and delivery locations.

Delivery Locations
Quality
The World Cotton contract will allow delivery in 12 locations in
The par quality for the new World Cotton contract is Colour 31, four countries: Memphis, Greenville, Dallas/Ft. Worth, Houston
Leaf 3, Staple 36, Strength 27 gpt and Mic 3.5 to 4.9. These and Galveston in the U.S.; Brisbane, Melbourne and Sydney in
colour, leaf, staple and strength provisions are all higher than Australia; Port Klang and Tanjung Pelepas in Malaysia; and Port
those of the No. 2 contract. Minimum deliverable staple for the Keelung and Port Kaoshiung in Taiwan. The four Malaysian and
World Cotton contract, which is at 35, is also higher. Taiwan locations are deliverable at par, and delivery in any of the
U.S. and in any of the Australian delivery points will be subject to
a U.S. or Australian discount (which is also subject to change on
a fixed schedule each year).
Origins
Launching this new contract was a logical step in our history of
The World Cotton contract will allow delivery of nine origins, providing solutions to cotton market participants, which dates
which collectively represent 73% of world cotton exports: the back to the establishment of the New York Cotton Exchange in
U.S., Australia, Brazil, India, Benin, Burkina Faso, Cameroon, the late 1800s. Our ability to evolve with the changing needs of
Ivory Coast and Mali. The U.S. is the par origin for the contract; the cotton trade for over 100 years has helped us to remain the
delivery of each other origin will carry a premium or discount home for cotton markets and we will continue to listen to the
(which is subject to change on a fixed schedule each year).
needs of our customers so we can be here for the next 100.

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