NEW YORK, July 14 (Reuters) - The IntercontinentalExchange (ICE) said on Tuesday it is poised to launch a long-awaited world cotton futures contract later this year after U.S. policymakers passed a bill that eliminates one of the last hurdles in its way.
U.S. Congress approved a bill on July 9 that will allow U.S. exchanges to handle foreign-grown cotton at delivery points around the world. The U.S. Department of Agriculture (USDA) has been required to sample and grade all cotton tendered against a U.S.-listed contract.
The Atlanta-based exchange has been pushing its new global contract, the first alternative for merchants, mills and growers to pricing on ICE’s U.S.-only one, for years but the law has forced it to fall behind its intended timetable.
ICE Futures U.S. President Ben Jackson applauded the move, describing it as a “common sense solution that will improve the ability of cotton market participants to hedge in a global market.”
President Barack Obama still needs to sign the change, but the passage by Congress moves the global contract one step closer to launch.
An exchange spokeswoman said ICE expects to launch the contract later this year, assuming it receives the president’s approval.
ICE said in 2013 it planned to launch the world contract, responding to pleas from cotton merchants who said the existing No 2 contract <0#CT:>, which serves as a global benchmark, is susceptible to manipulation.
The contract will include cotton grown in the United States, Australia, Brazil, India, Benin, Burkina Faso, Cameroon, Ivory Coast and Mali. Delivery points will be in Australia and Malaysia. (Reporting by Chris Prentice; Editing by Marguerita Choy)