August 11, 2015 / 8:15 PM / 4 years ago

UPDATE 2-ICE world cotton contract to begin trading in November

(Adds market comment, paragraphs 2-7)

NEW YORK, Aug 11 (Reuters) - Intercontinental Exchange’s world cotton futures contract will begin trading on Nov. 2, 2015, pending regulatory approval, the exchange said on Tuesday, announcing the long-awaited launch of a contract that has met a series of hurdles.

Merchants have been pressing for years for a world contract. ICE’s cotton No. 2 futures contract, which only allows for delivery of U.S. cotton, has long served as the world benchmark, even though the United States has been surpassed as the world’s largest grower.

Origins will include the United States, Australia, Brazil, India, Benin, Burkina Faso, Cameroon, Ivory Coast and Mali, the exchange said. The contract will have 12 delivery points in the United States, Australia, Taiwan, and Malaysia.

The announcement was broadly expected after ICE said last month it would it was poised for a 2015 launch. The exchange first said it planned to introduce the contract in 2013, but progress was stymied by regulatory issues in the United States and other key regions.

“It’s been a slow train coming. It’s something we’ve been working on for a long time as an industry,” said Jordan Lea, chairman and co-owner of Eastern Trading in South Carolina.

The new contract will trade alongside the cotton No. 2, ICE said.

Delivering to locations in Australia and the United States will garner a discount, to be announced at a later date. The Asian delivery points are located near the world’s biggest textile markets.

U.S. cotton will be used as the benchmark for pricing, with other origins trading at discounts and premiums. Those differentials will be announced closer to the launch date, ICE said. (Reporting by Chris Prentice and Luc Cohen; Editing by Phil Berlowitz, Peter Galloway and David Gregorio)

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