A new world market dealing in cotton futures was opened in London today (Monday). It?
A new world market dealing in cotton futures was opened in London today (Monday). It is sponsored by the Liverpool cotton industry and the opening ceremony was performed by a Liverpudlian, Lord Rhodes, and by Lord Carrick, the Chairman of the London Cotton Exchange.
The new market has been opened specifically in the interests of Western Europe, but since it will represent world cotton figures its facilities are expected to be used widely by Eastern European and Far Eastern countries. Developing countries in particular are expected to benefit from the market. Prices paid to farmers in these countries for cotton have tended to be low because of dubiety about future market prices. Now, through the London Futures Market, the price can be known up to the twelve months in advance of delivery.
Currently world cotton prices are subject to wide fluctuations, making manufacturers and traders costs very difficult to forecast and rendering the use of cotton financially hazardous without a reliable market of this kind.
The only other market of importance is the New York Cotton Exchange but this tends to reflect the United States position rather than world price and European countries in particular have been hesitant to use it.
Trading on the new market will be made in United States dollars, the traditional currency of the raw cotton trade. It is the first time a London Commodity market has dealt exclusively in dollars.