The cotton trading business of government-owned Dubai Multi Commodity Centre (DMCC) generated $100m last year, its CEO said on Tuesday, with a rising number of commodity firms setting up in the emirate's trade hub.
The centre, which also hosts trade in raw materials such as gold, diamonds, and oil, currently has about 2,800 registered companies involved in commodity trade, and aims to become a key link in the global cotton supply chain.
Two hundred new commodities firms registered in January and February this year, the centre said, boosting its business.
"In terms of our free zone business and registering new companies in 2010, it was a record year, we registered 725 new companies, that is a 40 percent rise over 2009," Malcolm Wall Morris, chief executive of the DMCC, told Reuters in an interview.
The bulk of companies setting up came from Switzerland, the UK, India, Pakistan, and the Far East, he said.
The DMCC, created in 2002, has had administrative links to state conglomerate Dubai World, which sealed a deal to restructure nearly $25bn in debt in September.
"Cotton, since the end of 2009 and then the full year of 2010, has done a $100 million worth of business," Morris said.
"The DGCX (Dubai Gold & Commodities Exchange), our futures market, did just under 200 million contracts last year of a notional value of $104bn up 28 percent. That exchange is growing consistently," Morris said.
The DMCC does not provide volume forecasts, but its Dubai Cotton Centre (DCC) is trying to capitalise on Dubai's trading infrastructure to assist the cotton trading community globally.
"The cotton business is very much a facilitation business between Uzbekistan and cotton millers and traders," Morris said.
Goldman Sachs Group Inc said on Thursday it saw downside risks for corn and cotton prices as the two crops were expected to make the most gains in acreage this spring.
"The cotton price that we have seen in 2010 is continuing as extremely volatile, there is huge price volatility," Morris said. "It is very challenging times for the cotton market."
Industry officials said recent correction in cotton prices in international market after the earthquake and tsunami in Japan could also impact domestic prices.
Cotton futures hit a record high amid tight global supplies, speculative buying and global economic growth.
Morris said the DMCC had not felt the impact of regional unrest, or an influx of Egyptian, Bahraini, or Libyan companies.
Popular revolts have toppled leaders in Egypt and Tunisia and are now challenging autocratic regimes in Libya as well as nearby Bahrain and Oman. The UAE, the world's third-largest oil exporter, has escaped the unrest so far.
Morris also said the DMCC had no new financing plans. "Currently we are self-financed, we don't need to and have no plans to tap into the bond market."For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.