* Plans to launch follow long-running discussions with
* Traders say U.S. contract vulnerable to price-distorting
* No details yet on origins or delivery locations
By Josephine Mason
NEW YORK, Oct 2 IntercontinentalExchange Inc
plans to launch the first global cotton futures contract
in early 2014, the Atlanta-based exchange said on Wednesday,
giving merchants, mills and growers their first alternative to
pricing on the U.S.-only contract.
The new contract will be listed alongside ICE's existing
U.S. contract and will accept foreign origins as well as
U.S.-grown cotton for delivery in multiple locations, including
the United States, an ICE spokeswoman said.
Other origins and locations are still to be finalized, she
"We will be working with cotton market participants to
finalize the details of this contract and hope that we can
resolve outstanding issues and launch an international contract
in early 2014," ICE Futures U.S. President and Chief Operating
Officer Ben Jackson said in a statement on Wednesday.
The move may help dispel criticism from growers, mills and
traders across Africa, Asia and the Americas that the exchange's
existing No. 2 contract is increasingly vulnerable to
Some say it may be even harder to lure money away from a
deeply entrenched benchmark that still enjoys the support of the
U.S. industry's biggest players.
The contract is used as the global benchmark but
accepts only cotton grown in the United States.
The move also reflects the diminishing U.S. role in the
global cotton market. The United States is the third-largest
producer behind China and India, and the world's No. 1 exporter.
Long-running discussions between the exchange and the global
cotton industry about the contract have stumbled over
specifications, dealers involved in the process have said.
While cotton from Brazil and Australia is the favored
foreign origin for the contract, growers, mills and traders have
struggled to agree on delivery locations, dealers familiar with
the discussions have said.
Dealers say the exchange is also under pressure to protect
its stronghold in the niche fibers market as it finalizes its
$8.2 billion takeover of NYSE Euronext, giving it a
near-monopoly in global cocoa, coffee and sugar derivatives
Last year, its Chicago rival CME Group Inc started
looking at listing an alternative futures contract which would
include foreign-grown fiber.